Updating post from Reddit.
Feeling like a bit of an idiot this morning.
Very amateur landlord, myself and my wife let a single property. We use a property management company.
We receive an invoice monthly from them which details the tenants payment of rent and all of the months deductions: always letting agent fees, often some other inspection or repair.
I noticed today(!) that each of these has VAT added (and has done for the last 5 years) and a very quick Google and gut feeling suggests the expenses are VAT exempt?
I am struggling to get a clear picture from my Google searches so my question are these:
For the expenses associated with letting the property (agent fees, repairs etc) are the costs VAT exempt?
If so, is there a way to recover about 5 years worth of paid VAT?
Thanks in advance and sorry if this is a bone question... I can expand any details if needed..
Thanks everyone for the insight. I'm not VAT registered so that clears everything up.
Good to know I haven't failed to reclaim a few grand !
Appreciate everyone helping out
That’s the trouble with Google! It can make it more confusing. All the services are liable to VAT so you’ve paid the right amount. Unlike other businesses we can’t reclaim input VAT so it’s just a cost we have to swallow. Hope that puts your mind at rest.
Might want to consider changing management company if they’ve not been clear on this. I use Landlord Lab and they do my accounts as well. Nice to have in one place and not have to deal with these types of issues. With MTD coming you’ll need software soon so I outsourced it from this year to get ahead of it.
I think management have to always charge VAT even if they under the VAT threshold! I don’t know why maybe someone can chip in here for a further explanation
An agency’s VAT threshold would be calculated on their total turnover and it’s very unlikely that this would not be above the threshold, which is about £90k now I think. So VAT is chargeable and cannot be recovered by landlords.
That’s right. It used to be the case that agents didn’t charge VAT on the basis that it’s residential services (quite a while back now iirc), but the government didn’t like that and said they’re technically working for the landlord and thus all their services must be VAT where applicable, and the tax man gets their money
Nothing to do with management. All businesses have to either charge VAT if registered, or not. Different services/goods have different amounts.