Commercial Buildings VAT

When buying a commercial building VAT may be included. If you're registered for VAT a property VAT loan may improve cash flow whilst you're waiting to reclaim.

VAT on commercial property

Commercial Buildings VAT

When buying a commercial building, VAT is often included in the price if the vendor has opted to tax the property. This is known as an ‘opted in‘ commercial property and the vendor will issue a VAT qualifying invoice for the sale of the property. If the buyer is VAT registered and will be using the building solely for the purpose of running the business, then they will be able to reclaim this input tax after it has been paid.

This can mean that large amounts of working capital is tied up with HMRC whilst a reclaim is being processed which can take between 45 to 120 days from the date of purchasing the property. An alternative is a VAT loan on your new commercial building which will keep cash in your business.

What is a VAT Loan

VAT loans bridge the gap between the purchase and the VAT being recovered by the business. There are many advantages to being able to finance the VAT including being able to make higher value purchases without tying up your capital, retaining liquidity and enabling your business to grow.

A VAT loan apart from improving cash flow when purchasing commercial property can also be used when purchasing land, machinery, vehicles and stock when VAT is included in the sale price.

Speak to a Commercial Property Specialist today

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Capital Allowances Tax Relief

Commercial Property Mortgages

VAT 100 Loans

Opting to tax land and buildings (VAT Notice 742A) – external link

For more information on Commercial Property VAT finance Contact Us today.

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