There are so many costs competing for a share of your hard-earned income.
One of those are commercial properties and land elected for a 20% VAT charge. FundingSmiths can facilitate funding up to 100% of your commercial VAT bill, helping minimise pressure on your cash flow. This saves you months of waiting for any VAT reclaim, allowing you to complete transactions faster and get on with your next project. Recovery is also dealt directly with HMRC meaning you don’t have to worry about monthly interest or final repayments.
When do I need to pay VAT on a property?
VAT is not always payable on a property transaction, but the sudden discovery that there is a 20% VAT fee payable is a nasty shock for investors who might think they have the deal done. In short, VAT is usually applicable on new commercial property sold as a freehold, and most other buildings are exempt. This is because the additional cost of VAT would have a negative impact on the UK residential housing market – house prices leaping up by 20% would hardly help the real estate sector.
While many commercial properties are exempt from VAT, this only means that the tax can be recouped – but will still need to be paid in the first place. This is a significant burden for developers, because while they may eventually get their money back within 2-3 months, sinking an additional 20% into a purchase severely restricts their ability to take on new projects in the meantime.
How do I reclaim VAT owed to me?
In many cases, the VAT paid on a property transaction will be redeemed from HMRC. However, the process of doing so is often time-consuming, and it can be a drain on resources to pursue the return of this money. With the support of our specialist VAT lenders, the entire VAT reclaim process can be handled on a client’s behalf which is an “all-inclusive” service from start to finish. This allows borrowers to focus on completing their project profitably and on-schedule.
VAT costs are simply a fact of life, and smart investors will make sure that they’re able to minimise the impact VAT has on their developments; by planning ahead and sourcing a VAT bridging solution that helps maximise profits and move on to a new project.
Would you like to know more?
Shoots of spring and confidence are emerging as we move further into 2022, but growth plans in this environment need to remain flexible. Think of us as your strategic funding manager that you can call upon to help execute your next commercial milestone. If you would like to discuss your commercial plans in more detail, we’d love to hear from you. Please email email@example.com or let’s talk to discuss further.