Should you charge VAT on rent when subletting part of your business premises?

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The default position when charging rent (supply of land or space) is that the supply is VAT exempt, even if your business is VAT registered.  If you are not VAT registered then exempt supplies do not count towards the VAT threshold.

Any VAT registered business can charge VAT on their rent supplies by “opting to tax”. If you wish to do this HMRC should be notified within 30 days. HMRC suggests using Form VAT1614A to do this.

It is worth noting that if services are provided along with the space then this does not apply.  Services could be use of equipment, booking facilities,  reception service, anything that isn’t simply use of a space.  If services are included VAT must be charged if you are VAT registered with no option to tax needed or available. Also if services are included then the whole amount counts towards the VAT threshold if you are not VAT registered.


As with all of our tax tips and web pages this information is necessarily summarised and of a general nature.  If you would like detailed specific advice please contact us.