Impact of VAT Increase on Landlords

The rise in VAT from 17.5% to 20% affects retail consumers directly, but the impact to landlords is minimal as rents are not subject to VAT. However, landlords are still impacted directly through the goods and services that are purchased for their properties, such as maintenance or leasehold improvements. Though landlords may want to consider how to be more tax efficient, it probably isn’t necessary to become VAT registered if only one or two properties are being held. However, if a landlord is running a larger portfolio (but still under the mandatory VAT registration threshold of £70,000 in annual turnover), there is the opportunity to claim back all the VAT paid as a part of running the business when becoming VAT registered.