Reduced rate of VAT for Intelligent lighting systems

VAT for smart lightingSince 1973, with a few exceptions, there has been no VAT chargeable on the labour or building materials for constructing a genuinely new, self-contained house or flat.

However, items which are not ‘incorporated’ ie virtually all free standing ‘appliances’ – and this has always included lighting and heating systems, have been liable to full VAT thereby adding significantly to overall costs. But, in last year’s welcome update to HMRC’s VAT Notice 708 (Building and Construction), sub paragraph 13.8.1 was updated to include central controls for light, heat and ventilation as examples of articles ‘ordinarily’ incorporated in dwellings. ‘Intelligent lighting systems’ are now also accepted as ‘the norm’ – although not the accompanying remote control handsets and colour touchscreens. This change highlights a significant shift in the thinking about lighting control systems and residential development. It means that where a new build or renovation is eligible for a reduced rate of VAT, any lighting control installed will also be eligible for the reduced rate and this is very positive news.

When designed and installed properly, lighting controls can make a lighting scheme easier-to-use, more energy-efficient and contribute to improved home security. Now recognised by the VAT man as an everyday, “ordinarily”
incorporated item in dwellings this can only help the industry offering well designed, affordable and energy efficient homes.

It’s still a complex area and needs to be studied with care for each project but for full details on whether your new build is liable or not to VAT, contact Karen at Intelligent Abodes Ltd.