Did Someone Say VAT-Free Annexe? Yes, Please.
Thinking of building a granny annexe, garden pod, or self-contained living space? Here at Heritage Garden Studios, we’ve got great news: you could save 20% VAT on your annexe if it qualifies under the Caravan Act. That’s not a loophole—it’s a legal advantage most people simply don’t know about.
This guide explains what the Caravan Act is, how it can make your annexe VAT-free, and how we at Heritage make it all effortless.
What Is the Caravan Act—and Why Should You Care?
The Caravan Sites and Control of Development Act 1960, along with updates from the Caravan Sites Act 1968, legally defines what counts as a “caravan.” And surprisingly, it’s not just touring caravans.
The Legal Definition
A caravan is any structure designed or adapted for human habitation which is capable of being moved from one place to another—even if it’s delivered in two sections and assembled on-site.
To qualify, your annexe must:
- Be movable
- Be delivered in no more than two parts
- Not exceed:
- Length: 20m
- Width: 6.8m
- Height: 3.05m
If your structure meets these requirements and is intended as a residential dwelling, it qualifies under the Act, and you could be eligible for 0% VAT.
How Does This Save You VAT?
By default, building a garden annexe means paying 20% VAT on the full cost. That’s an extra £14,000 on a £70,000 annexe.
But if your annexe is a “caravan” under the Act and is used for full-time living, it qualifies as zero-rated for VAT under HMRC guidelines.
Zero-Rated = Zero VAT
Instead of adding VAT to your final invoice, we apply a 0% rate—saving you thousands. It’s completely legal, completely above board, and something Heritage Garden Studios is proud to support.
How We Build Caravan-Compliant Annexes at Heritage Garden Studios
We’ve designed our process to make VAT-free annexes simple, stylish, and stress-free. Here’s how we do it:
1. Modular, Movable Construction
Our garden annexes are built in two sections off-site, then delivered and assembled in your garden. This keeps everything mobile and compliant.
2. Dimensions That Fit
We ensure every build stays within the legal maximum dimensions, keeping you within Caravan Act guidelines while maximizing your space.
3. Fully Habitable Living Space
Each Heritage annexe includes:
- A fitted kitchen
- Bathroom with shower
- Plumbing and electrics
- Insulation, heating, and Wi-Fi-ready design
It’s a true home, not just a shell.
4. Removable Foundations
Rather than permanent concrete bases, we use removable chassis bases or pad systems—meeting the requirement of “non-permanent” attachment to the land.
Example: The Classic Heritage Annexe
Picture this: You’re building a garden annexe for a parent who’s moving in. You choose our Classic Heritage Annexe, which:
- Comes in two parts
- Assembles on-site
- Includes a full kitchen and bathroom
- Is connected to services, but not fixed to a foundation
Result? Fully compliant with the Caravan Act. Zero VAT charged on your invoice.
How to Qualify
Here’s what you’ll need to make sure your build is eligible for VAT-free status:
You Must:
- Use the annexe as a residence
- Keep the structure technically movable
- Ensure it fits within the legal size
- Let Heritage provide the documentation and design
We’ll handle the VAT assessment and work with your local council where necessary.
Frequently Asked Questions
Q: Can my annexe have plumbing and electrics?
Yes. These are standard and don’t impact mobility.
Q: Does it have to have wheels?
No. It must be capable of being moved, usually via modular transport.
Q: Will I need planning permission?
In most cases, yes—but we help you navigate the process from day one.
Q: How do I prove I qualify for VAT exemption?
We take care of this. Heritage Garden Studios will supply all necessary documentation to prove eligibility under HMRC rules.
Why Choose Heritage Garden Studios?
With Heritage, you get more than just a build—you get peace of mind.
We:
- Specialise in VAT-free annexes
- Handle planning, design, and delivery
- Craft each space with quality, comfort, and longevity in mind
- Work directly with VAT experts to ensure compliance
Let’s Build Your VAT-Free Dream Space
Want to explore a bespoke, VAT-free garden annexe for your home? Whether you’re creating space for family, independence, or future flexibility, we’ll help you do it smartly and legally.
Contact us today for a free design consultation.
Explore our recent builds:
Download Our Annexe Buying Guide
Let’s make your dream space happen—and keep more money in your pocket while we’re at it.
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