How is VAT applied to the costs of site-based staff?

In 2018, HMRC (His Majesty’s Revenue and Customs) introduced guidance requiring Property Managers to apply a 20% VAT charge to the cost of site-based staff. This VAT is collected through your development’s service charge. 

This only applies to developments where you pay a service charge and there are dedicated site-based staff. These are team members directly employed by us who help managing the day-to-day running of your estate, building or block of flats. This includes roles such as: 

• Development Managers and Assistant Development Managers 

• Concierge 

• Caretakers 

• Cleaners 

• Maintenance Operatives 

• Gardeners 

VAT applies to all employee payroll costs, including:

• Salary 

• Benefits 

• National Insurance 

• Pension contributions 

Some costs are excluded from VAT, such as: 

• Staff training 

• Staff expenses 

• Costs related to a Development Manager’s flat (e.g. Council Tax, if they live on-site) 

Just to clarify, we don’t make any profit from this VAT charge. It’s a government requirement and we simply collect the VAT and pass it on to HMRC.