Value Added Tax Act 1994 section Schedule 10 paragraphs 5–11

Exclusions from effect of option to tax

Section Schedule 10 paragraphs 5–11 set out the circumstances in which an option to tax land or buildings is overridden and has no effect, primarily where the property is used for residential, charitable or social housing purposes.

• An option to tax has no effect on grants relating to buildings designed or adapted for use as dwellings, for a relevant residential purpose, or solely for a relevant charitable purpose (unless used as an office)
• Where a building is intended for conversion into dwellings or residential use, the recipient of a grant can certify this intention to disapply the option to tax, and a chain of certificates is permitted where the interest passes through intermediaries before reaching the party who will carry out the conversion
• Grants relating to pitches for residential caravans and mooring facilities for residential houseboats are excluded from the option to tax, provided year-round residence is not prohibited by covenant, planning consent or similar restriction
• Grants of land to relevant housing associations for constructing dwellings or buildings for relevant residential purposes, and grants to individuals for constructing their own home outside the course of a business, are also excluded from the option to tax