Summary
- HM Treasury and HMRC launched an 8-week consultation (23 June–18 August 2026) on a new VAT zero rate for land intended to build social housing, aiming to support delivery of 1.5 million homes this Parliament. [gov.uk], [gov.uk]
- Currently, zero-rating only applies once construction passes the“golden brick” stage (above foundations); before that, bare-land sales are exempt unless the seller opts to tax, creating an irrecoverable 20% VAT cost for registered providers. [penningtonslaw.com], [sumer.co.uk]
- Bringing zero-rating earlier—potentially where planning permission exists—would let title transfer to housing associations sooner, easing funding-deadline pressures, cutting cost and complexity, and accelerating affordable homes. [housing.org.uk], [thelawyer.com]
Article
On 23 June 2026 the UK government opened a joint HMRC/HM Treasury consultation on introducing a new VAT zero rate for the sale of land intended for the construction of social housing across the UK, closing at 11:59pm on 18 August 2026. Under current rules, land supplies are generally exempt unless the seller opts to tax; construction of qualifying dwellings can be zero-rated, but a building “in the course of construction” only qualifies once works reach golden brick—broadly above foundation level. Where opted land is transferred earlier, the 20% VAT charged is irrecoverable for registered providers making exempt onward supplies, which is why golden-brick structures are used. The National Housing Federation has argued for zero-rating land sold to providers where outline planning permission for social housing exists, saying the golden-brick approach causes delay, complexity and added cost. Advisers welcome the reform as preserving VAT neutrality while removing commercial timing pressures.
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