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Sam, Accountant
Category: Tax
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I rent a house. I am having a loft extension done. When I sell

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I rent a house. I am having a loft extension done. When I sell t he property in the future, I will need to pay capital gains tax on the profit. I want to be able to reduce the profit from selling the house by the amount which the work is costing. The work is being done by a builder who employs a carpenter and him, and will also involve a plumber and electrician. IN terms of invoices, the plumber and electrician I am guessing will be vat registered, but the builder and carpenter dont seem to be, judging by the lack of vat no on their first invoices, (maybe because they are not earning enough to go above the threshold for VAT registration). I have received the first invoices from the builder and the carpenter. Neither of them have VAT numbers, I assume as I am not paying VAT for the work? (I have not discussed this with them, I just asked how much the work would be and agreed the price). one of the invoices is roughly :
Company name header
(My address and date)
Dear ***** and Digna,
Following commencement of loft conversion of above property, please find below my initial invoice
Total £3695.00
Broken down as:- £1695.00 Payable to me
£2000.00 Cq to Chandlers building supplies
Yours Sincerely,
(The builder has told me he will send the invoice from the builders merchants to me and it will be in my name)
The other builder has simply written an invoice which has an invoice number, his address and phone number, today`s date, my and my wifes name:
8 days labour at.......
labour : 1260
Total to be paid 1260.
My question therefore is, would these types of invoices together with the record from my bank of money being paid to them be enough of a record of evidence of the costs I paid to have the loft extension built, and therefore enough evidence to justify reducing the overall gain by the amount the loft conversion cost me?
In effect, they are records of payments I have made. I guess I am not paying VAT for the work as I guess they are not charging it? But it is not vat I am trying to claim back, rather it is the cost of the work I had to pay for.


Thanks for your questions, I am Sam and I am one of the UK tax experts here on Just Answer.

Your assumption regarding the VAT position is correct, unless they are registered for VAT (as they exceed the VAT threshold) then no VAT will be charged, and as their invoices do not contain a VAT number, you can safely assume they are not in this income threshold, so no VAT will be charged.

And yes these are more than sufficient for evidence of the costs paid for the work to be undertaken, but if you paid by credit card or cheque, then keep evidence of the relevant statements to, which can then be deducted from the gain when the property is sold, and capital gains have to be considered.

Let me know if you have any follow up questions before you rate the level of service

Thanks Sam

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