Option to tax form VAT1614A is the notification you send HMRC when you decide to charge VAT on supplies of land or a building that would otherwise be exempt. You complete it online, print or save it as a PDF, sign it, and email it to HMRC’s Option to Tax National Unit within 30 days of making the decision. Once accepted, the option lets you recover VAT on related costs but binds you to charge 20 percent VAT on rent or sale proceeds for 20 years.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A)
When You Use VAT1614A
Sales, leases, and rentals of land and buildings are normally VAT-exempt, which sounds helpful but blocks you from recovering VAT on construction, refurbishment, or professional fees tied to the property. Opting to tax reverses that: your supplies become standard-rated at 20 percent, and the input VAT on related costs becomes recoverable.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A) VAT1614A is the form that tells HMRC you have made that decision.
You do not have to own the property to opt. HMRC allows anyone to exercise the option, whether or not they currently hold an interest in the land, which is useful for a prospective buyer who needs the option in place before completion.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A) To actually charge and recover VAT, though, you need to be VAT-registered or intending to become registered. The option belongs to the legal person who makes it, not to the property, so a partnership’s option does not transfer to a company later taking over the building.
What You Fill In
Form VAT1614A is on the HMRC website. You complete it online then print it for submission, and you cannot save a partly completed version, so pull the details together before you start.2HM Revenue & Customs. VAT1614A – Tell HMRC About an Option to Tax Land and Buildings
The form asks for:
- Your nine-digit VAT registration number, which links the option to your VAT account.
- The full postal address of the property and, where relevant, the Land Registry title number. If the option covers only part of a larger site, describe the boundaries clearly and attach a map or site plan.
- The effective date of the option. This is normally the date the decision was made, or a later date you specify.
- The nature of your interest in the property: beneficial, legal, or none currently.
Electronic signatures are permanently accepted on option to tax notifications. The temporary concession introduced during COVID-19 has been made permanent, so you do not need a wet signature.2HM Revenue & Customs. VAT1614A – Tell HMRC About an Option to Tax Land and Buildings
How to Submit the Form
Email is the preferred route. Send the completed form as a PDF attachment to optiontotaxnationalunit@hmrc.gov.uk.3GOV.UK. Changes in Processing Option to Tax Forms You can still post a hard copy to the Option to Tax National Unit, but email gives you an immediate delivery record.
Shortly after HMRC receives the notification, you should get an automated acknowledgement confirming the file arrived. That acknowledgement is not approval. HMRC then reviews the submission and, if everything is in order, issues a confirmation recording the option on their register.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A) Keep that confirmation with your permanent property records. Buyers and their solicitors routinely ask for evidence of a valid option when purchasing an opted property, and locating it years later can be difficult.
The 30-Day Deadline
You must notify HMRC within 30 days of the date the decision to opt was made. The clock runs from the day the decision was taken, not the day you complete the form or the effective date you choose.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A) Missing the deadline can invalidate the election. If that happens, any VAT you charged on rent or sales was charged without authority, and input tax you claimed on related costs may need to be repaid.
HMRC will sometimes accept a late notification if you can show evidence that the decision was genuinely made on the date you claim. Board minutes, dated internal correspondence, or emails between directors discussing the decision help establish the timeline.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A) Contemporaneous records save considerable trouble. The problem often surfaces years later when a buyer’s solicitor asks for proof of the option and the paper trail has gone cold.
When You Need HMRC’s Permission First
Most notifications on VAT1614A are automatic: you decide, you notify, the option takes effect. But if you have made, or intend to make, exempt supplies of the same land or building within the 10 years before your proposed effective date, you need HMRC’s written permission before you can opt. The rule exists to stop opting being used to manipulate input tax recovery on historic costs.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A)
To apply for permission you use form VAT1614H instead of, or alongside, VAT1614A. HMRC reviews the application and will refuse permission if granting it would result in an unfair attribution of input tax. HMRC does not issue interim permission letters; if satisfied, they issue an acknowledgement confirming the option and its effective date.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A)
Supplies Your Option Will Not Cover
Even after HMRC accepts your VAT1614A, some supplies of the building stay exempt by law. Your option is automatically disapplied and you cannot override this:
- Buildings designed or adapted for use as dwellings, such as houses or flats.
- Relevant residential buildings, including nursing homes and student accommodation, where the buyer or tenant informs you of the intended use before the supply.
- Non-residential buildings being converted into dwellings, once the recipient gives you a certificate on form VAT1614D.
- Buildings intended for use solely for a relevant charitable purpose (other than as a general administrative office), where the buyer or tenant notifies you of that use before the supply.
Where your option is disapplied on a supply, you lose the right to recover input tax on costs attributable to that exempt supply. Mixed-use buildings require you to apportion input tax between the taxable and exempt parts.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A)
What You Are Committing To
The option to tax runs for 20 years, and outside two narrow windows you cannot get out of it. That makes the notification on VAT1614A a decision worth checking against your longer-term plans, particularly your likely tenant profile.
Effect on Tenants
The option applies only to your own supplies. A buyer or sub-letting tenant makes their own independent decision about whether to opt. But once you opt, your tenant pays 20 percent VAT on top of the rent. A VAT-registered tenant making taxable supplies recovers that VAT, so the cost is neutral. A tenant who is not VAT-registered, or who makes only exempt supplies such as financial services or medical work, cannot recover the VAT, and their rent effectively rises by 20 percent. HMRC recommends telling tenants of your decision at the earliest opportunity so they can consider their own position.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A)
Revoking the Option
There is a six-month cooling-off period. You can revoke the option within six months of its effective date if no VAT has become chargeable as a result of it, no transfer of a going concern has occurred involving the property, and you meet the input tax repayment condition set out in Notice 742A. Notification of revocation goes on form VAT1614C.4GOV.UK. VAT1614C – Opting to Tax Land and Buildings
After the six months, revocation is generally not available again until more than 20 years have passed since the option first took effect, at which point form VAT1614J is used and further conditions apply.1GOV.UK. Opting to Tax Land and Buildings (VAT Notice 742A) Between those two windows you are locked in, which is why the decision behind VAT1614A deserves proper thought before the form goes off to HMRC.