VAT and Rental Income

Rental income is classified as exempt for VAT purposes as far as HM Revenue and Customs are concerned. 

For residential property rental income there is no means of being VAT registered.

The position for Commercial Property is different as you have the option to opt to tax a property and this can be done individually per property. 

For RentWhen you opt to tax a property it means that you can reclaim tax on your purchase costs i.e. property cost, legal fees etc. When the property is rented out to a tenant you must charge them their rent plus VAT. The option to tax lasts for 20 years and then lapses. 

If you are entering into this type of transaction, you need to ensure that you get the right advice at the right time to ensure that the paperwork is completed appropriately and timely.