AN indirect tax specialist has welcomed a technical VAT measure announced in the autumn budget, claiming it will simplify delivery of affordable housing across the UK.
The UK Government has confirmed that a new zero rate of VAT will apply to land sold to registered providers of social housing from 1 April 2027, subject to legislation. According to the official briefing, the measure is intended to remove the need for developers and housing associations to rely on so-called ‘golden brick’ arrangements when structuring transactions and delivering housing projects.
Greg McNally, managing partner at VITA, said, “If I had to pick one measure from this budget, this would be it. It is arguably one of the most helpful technical VAT changes announced in the budget and will be welcomed by both the social housing and construction sectors.
“The current rules have often required developers and housing associations to structure transactions around ‘golden brick’ arrangements in order to achieve the correct VAT treatment. While that approach has become well established, it can add complexity, cost and administrative burden to projects. The introduction of a dedicated zero rate for land sold to registered providers of social housing should simplify transactions considerably and give all parties greater certainty from the outset.
“At a time when there is significant pressure to increase housing delivery across the UK, any measure which removes unnecessary complexity from the development process is to be welcomed. The detail I’ll be watching is the scope. The consultation talked about bare land, and the government’s response now simply refers to land. If that includes sites with existing buildings due for demolition, the relief becomes far more useful, particularly for brownfield regeneration.”
Greg added that attention will now turn to the detailed legislation and accompanying HMRC guidance, particularly around how the new rules will interact with the various models used to deliver affordable housing developments.
“The principle behind the change is very positive, but as always with VAT the detail will matter,” he added. “Businesses involved in social housing projects will be keen to see clear guidance from HMRC well in advance of implementation in April 2027.”
