Jurisdiction(s):
United Kingdom

Key definition

Input tax definition

What does Input tax mean? Input tax is the vat a VAT‑registered business incurs on purchases, imports and certain self‑assessed charges, which it may deduct from its output tax on its VAT return if the costs are used for the business’s taxable activities. In the UK (including the Isle of Man), input tax is defined in legislation: Value Added Tax Act 1994, section 24(1). It covers VAT on supplies to the taxable person, import VAT and (where applicable) VAT on intra‑EU acquisitions, provided the goods or services are used, or to be used, for the purposes of any business carried on or to...

UK VAT in commercial developments: option to tax, anti-avoidance disapplication, input recovery, TOGCs, forward funding/sales, planning/CIL, tenant incentives, surplus land and rights to light

Published by a LexisNexis Tax expert

Practice notes

This Practice Note addresses the VAT considerations that arise in commercial development projects. It first outlines a simple, uncontentious scenario, then explores:

when and whether the developer should opt to tax
Input tax recovery and circumstances in which that option could be disapplied
whether a sale to an investor qualifies as a transfer of a going concern (TOGC)
alternative development structures, such as forward funding and forward sales
planning obligations and other payments towards local Infrastructure
tenant incentives
disposals of surplus land and incomplete schemes, and
rights to light

For VAT issues in residential developments, see Practice Note: Residential development—VAT issues.

Basic scenario

There can be a variety of VAT considerations with commercial schemes, yet in practice most projects do not create major difficulties. It is helpful to begin with a clear, uneventful example involving a speculative development. In this situation, the developer identifies an opportunity and opts to tax at that point, intending to make taxable supplies from the development (see Practice Note: The option to tax land and buildings)...

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

Martin Scammell

Martin Scammell is an independent VAT consultant, specialising in property and construction matters, who works with tax departments in major corporates and universities, and with a number of law and accountancy firms. He is the author of the leading reference work on VAT and property.Martin started out in VAT Policy in Customs & Excise, was a Partner at Ernst & Young, where he headed up the VAT real estate group, and then became head of indirect tax at Eversheds.He has been involved in the development of VAT legislation and policy over many years, and regularly serves on working parties established by HMRC. He was a member of the Office of Tax Simplification’s consultative committee for their review of VAT in 2017, and in 2018-19 of HMRC’s external stakeholder group considering the proposed reverse charge for building work. Martin currently works with HMRC as...

Web page updated on 22/05/2026

Popular documents

Using the Judicial College Guidelines to assess general damages in personal injury claims

When evaluating a general damages claim, the practitioner ought initially to refer to the Judicial College Guidelines (JCG)...

Tomlin orders in England and Wales: CPR guidance on drafting, confidentiality, approval, variation, enforcement, limitation, CCA issues, court-specific requirements, sample wording and precedents

This Practice Note This Practice Note reviews mechanisms used in settling litigation. A Tomlin order consists of a consent order paired with a schedule. It operates to stay proceedings on terms that have been agreed. The provisions contained in the schedule may remain confidential. This Practice Note describes the scope of confidentiality attaching to the schedule and sets out how it differs from a standard consent order. Sample wording for a Tomlin order is included, alongside links to precedents, as well as guidance on court approval. It also addresses varying, setting aside and enforcing a Tomlin order, including the considerations the court will take into account when handling applications for each. Further guidance is provided on interpreting and applying the relevant provisions of the CPR; however, some courts and divisions impose very specific requirements for both drafting and approval, and for approaching the schedule and confidentiality issues. Accordingly, you must consider the particular rules and court guide provisions in the forum where your claim is proceeding when drawing up the Tomlin order...

Precedent: Deed of Surrender of Lease with Optional Premium, Settlement and Release, Landlord, Mortgagee and Guarantor Consents, Reimbursement and HM Land Registry Provisions (England and Wales)

Date [ date ] Parties [ name of Landlord ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Landlord) [ name of Tenant ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Tenant) [ [ name of Guarantor ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Guarantor) ] [ [ name of Mortgagee ] [ of OR incorporated in England and Wales (company registration number [ number ]) with its registered office at ] [ address ] (Mortgagee) ] Definitions Within this Deed, the terms below shall be interpreted as follows: [ Annual Rent • the annual sum reserved under the Lease; ] [ Insurance Rent • the Tenant’s share of the Landlord’s costs of insuring the Property (as set out in the Lease); ] Lease • the lease of the Property dated [ date ], entered into between (1) [ the Landlord OR [ name ...

Precedent Statutory Declaration: Standard Wording under the Statutory Declarations Act 1835

I, [ name ], of [ address ], solemnly and sincerely state that: [ Matters to be verified, set out in numbered paragraphs ] I make this solemn statement in good conscience, believing it to be true, and pursuant to the provisions of the Statutory Declarations Act 1835. DECLARED at [ details ] this [ day ] day of [ month and year ] Before me ................................................................................ [ signature of the person before whom the declaration is made ] A [ commissioner for oaths OR [ solicitor OR [ insert other qualification ] ] authorised to administer oaths ]...