Shropshire businesses must prepare carefully for the new tax year in order to ensure they’re operating as efficiently as possible…
Barns could bring in vital cash
Shropshire farmers who decide to convert unused outbuildings to residential properties could benefit from reduced VAT charges.
Dyke Yaxley’s Mark Griffiths said “many farmers had suffered financially during the tough economic climate, and some had decided to maximise their assets”.
“Barn conversions have always been extremely popular, and it makes absolute sense for farmers to turn to unused buildings on their land as a source of finance.
“The construction of a new house is zero VAT rated, and a reduced rate of 5% is available for converting a non-residential building, such as a barn, into a residential property. The reduced rate will also apply if you’re converting a residential building into a number of units.
“But in order to qualify for the preferential rate, there are strict rules to be followed so it’s vital to take expert advice before any work begins.”
Mark said the rules required that the converted building should be designed to be occupied by a single household, and that the design should provide self-contained living accommodation.
“The new conversion must not have direct internal access to another dwelling or part of a dwelling, so that means annexes and extensions to an existing property would not qualify.
“You must ensure that there are no covenants or clauses in the planning consent that prohibit the building from being used separately from the main farm property, or that rule it out from being sold on separately.
“That’s why it’s important to carefully scrutinise any planning consents to ensure the correct rate of VAT is applied otherwise you could fall foul of the rules.
“Agricultural occupancy conditions on your main farm dwelling should not cause any problems when it comes to converting outbuildings, but check the small print as additional clauses could be a real sticking point.
“You should take VAT into account before any kind of work begins, and if you follow the guidelines correctly, a barn conversion could bring in badly needed income to help during financially difficult times.”
Dyke Yaxley’s Agricultural Director, Mark Griffiths
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