Do I Charge VAT When Letting A Serviced Office?

Do I Charge VAT When Letting A Serviced Office?

This post was originally published in June, 2014 and was updated on 10 June 2020 for freshness, accuracy and comprehensiveness.

There are two parts to this question: the room, and the services provided.

1) The room

First of all, you have to look to see if you’ve granted a licence to occupy land.

Simply put, if the agreement grants right of occupation of an office for an agreed duration in return for payment, and gives the right to exclude others from that office then it is a licence to occupy land.

If you meet this criteria you are making an exempt supply and therefore DO NOT charge VAT.

2) The services

The question then arises about whether you should charge VAT on the services provided.

Basically, if you charge tenants, under the terms of your lease, for services such as reception, switchboard and photocopying, it will follow the main supply of rent and therefore be exempt, as long as these services would reasonably be expected to be included alongside the office space.

With electricity, light and heat, even if you make a separate charge for unmetered supplies, this will also be exempt.

If you charge separately for any services which are not included within the agreement then they will usually be standard or reduced rated dependent on the service being supplied.

If you do not want to have exempt supplies you can look at opting to tax. This would make all your supplies standard rated and so you would charge your tenants VAT and also be able to claim input vat.

As with all VAT issues, nothing is straightforward and the above is just a simple guide. Our team at Green & Co are only a phone call away and can help you with your specific situation.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

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