VAT on captial expenditure

patw

Hi,
Congratulation's on a brilliant site, this is my first post so hopefully someone can help.
I am in the process of setting up a limited business and am looking into getting a premises sorted out. I was wondering if someone could point me in the right direction with regard to the VAT implications when buying a premises. My understanding is that that is i purchase a premises i am liable for VAT and cannot reclaim. Is this correct and if so is there any deductions which can be claimed? Is there capital allowances which can be claimed?

Thanks,
Pat

Mr. Incognito

VAT on property is quite complicated added to which all the rules have changed this year.

Capital allowances are applicable regardless.

What type of premises are you purchasing / building?

Most start up companies purchase a lease- is this the case?

If you are VAT registered and purchase the freehold in a building for business purposes and it is used wholly for business purposes, generally you can reclaim the VAT paid.

patw

I am looking at purchasing an existing premises which has not been previously used. I know that if I lease I would be able to claim the VAT back but am curious if this also applies to buying out the freehold title of the property. This property will only be used in a business capacity.

Mr. Incognito

You can claim the VAT back but you will need to get VAT registered first. Incorporate the company and get VAT registered before you buy the premises.

patw

Thanks for all the help i appreciate it.