VAT on self storage

In the UK the grant of a licence to occupy land is exempt from VAT, apart from a list of exceptions. Self storage is on that list, so it is standard-rated, not exempt. Since 1 October 2012, providing space for customers to store their goods in a building, a unit or a fully enclosed container has been standard-rated, so a VAT-registered operator charges VAT on the licence fee. This entry sets out the rule, what it covers, the situations where it does not apply, when a business has to register and how to show prices. It is general information, not tax advice, and the rates and thresholds are those in force on 9 October 2026.

Is self storage standard-rated?

Yes. Under the Value Added Tax Act 1994 the grant of any licence to occupy land is exempt from VAT except for a list of supplies, and “the grant of facilities for the self storage of goods” is on that list (Schedule 9, Group 1, item 1(ka)). Being excluded from the exemption makes it a taxable supply at the standard rate, which is 20%.

Item 1(ka) was inserted by the Finance Act 2012 and took effect on 1 October 2012. Before that date a clearly defined storage space provided under a licence to occupy was exempt, unless the owner had chosen to “opt to tax” the land, which made it standard-rated. HMRC says the change was meant to create a level playing field in the storage sector and to address avoidance. Storage with no allocated area, as with a traditional removal company that is free to move goods around, has always been standard-rated.

What counts as a storage facility: units, buildings and containers

The Act defines “facilities for the self storage of goods” as the use of a “relevant structure” to store goods by the customer, or by someone the customer permits. A relevant structure is the whole or part of a container or other structure that is fully enclosed, or a unit or building. HMRC adds that:

• “storage” and “self storage” mean the same thing, and the rule is not limited to small units that individuals use for personal belongings;
• if goods are physically stored in the structure, it is being used for storage, whatever the supplier intended or the agreement says;
• a facility that is clearly for storage is caught even while it is empty; and
• the supplier is responsible for applying the right treatment according to how the space is actually used, and where a space could be used in more than one way HMRC advises getting the customer’s use confirmed in writing and keeping it with the VAT records.

On 9 October 2026 we found nothing on open-air storage in the self storage chapter of HMRC’s manual (VATLP17500 to VATLP17900). HMRC’s manual treats facilities designed for, or provided specifically for, parking vehicles as standard-rated parking facilities (VATLP15100), and on that date we found nothing in HMRC’s guidance on customers’ own containers or plant kept on open land. Whether a yard where customers keep their own containers or plant is a standard-rated storage supply, a parking supply or an exempt licence of land is not settled in the guidance we found, so take advice before pricing it.

When the storage rule does not apply

Four specific exceptions apply, according to the Act’s notes and HMRC’s manual:

• Live animals. For item 1(ka), the Act’s notes say “goods” does not include live animals.
• Connected parties and a capital item still in the Capital Goods Scheme. Where the structure is, or forms part of, a capital item the supplier is still adjusting for under the Capital Goods Scheme (HMRC’s scheme for adjusting the VAT first claimed on certain capital items as their use changes over a period of years), and the supplier is connected with a person storing goods in it, the rule does not apply. Whether people are connected is decided under section 1122 of the Corporation Tax Act 2010.
• A charity storing solely outside any business. The exclusion is for a grant to a charity that uses the structure solely otherwise than in the course of a business; HMRC puts it as “solely for non-business purposes”. The statute limits it to charities.
• Storage ancillary to the customer’s other use of a building. Where the structure is part of a building and the customer’s storage is ancillary to its other use of the building, the rule does not apply. HMRC’s example is a shop with a stockroom, where the payment stays exempt unless the owner has opted to tax. A customer who takes a warehouse to store goods and uses a small part of it as an office pays VAT on the whole, because storage is the principal element.

Where the storage rule does not apply, the ordinary rules for land do: a licence to occupy is exempt unless the owner has opted to tax the property.

Other storage the VAT rules treat separately

Some storage is excluded from the exemption by other items in the same Schedule, enclosed or not, and is normally standard-rated:

• Boats and aircraft. The grant of facilities for housing or storing an aircraft, or for mooring or storing a ship, boat or other vessel, is excluded from the exemption (item 1(k)).
• Vehicles and touring caravans. The grant of facilities for parking a vehicle is excluded too (item 1(h)). HMRC’s manual treats storing touring caravans as standard-rated whether or not a numbered bay is allocated, however long it lasts (VATLP21400), and a garage designed for parking vehicles as standard-rated even when it is used for something else, such as storage, unless the agreement specifically prohibits parking a vehicle (VATLP15100).

When a business has to register for VAT

A business must register if its taxable supplies over the last 12 months have gone over £90,000 (unless HMRC is satisfied they will not exceed £88,000 in the next 12 months), or if there are reasonable grounds to believe they will exceed £90,000 in the next 30 days alone. It can ask to cancel its registration if taxable turnover will stay under £88,000 in the coming year. Both figures have applied since 1 April 2024 (S.I. 2024/307), and HMRC’s guidance for 2026 to 2027 still shows them.

Income from storage that item 1(ka) covers counts towards that turnover. A taxable supply is any supply made in the UK that is not exempt (Value Added Tax Act 1994, section 4(2)), and storage under item 1(ka) is not exempt. Exempt supplies, such as a building used by a customer for something other than storage where the owner has not opted to tax, do not count.

Two consequences matter to a business that is close to the line:

• Registering late. HMRC registers you from the date you became liable, and you owe VAT from that date even if you did not charge it.
• Charging VAT when not registered. An unregistered business must not show VAT on its invoices. A business that is not VAT-registered (or otherwise authorised) and issues an invoice showing an amount as VAT can be charged a penalty, unless it has a reasonable excuse for a non-deliberate error. HMRC can also recover any amount shown as VAT from whoever issued the invoice. HMRC’s own example is an unregistered sole trader.

A farm adding storage has one more question. A farmer on the Agricultural Flat Rate Scheme cannot charge VAT, and if non-farming turnover goes over the registration threshold the farmer must leave the scheme and register, unless the non-farming side is run as a separate business by a different legal entity. HMRC’s examples of non-farming activity are bed and breakfast, holiday accommodation, farm visits and riding lessons; storage is not among them. The notice does list “storage of agricultural products” as a qualifying service when it is linked to one of the listed farming activities, but it does not say how letting space for other people’s goods is treated, so take advice on how storage income sits with the scheme. Our guide to farm diversification into storage covers the business case, and the Class R guide covers the planning route for a barn.

Recovering the VAT you pay, and the option to tax

HMRC says a business can reclaim VAT on items it buys for use in its business if it is VAT registered, on its VAT return. A business with turnover below the £90,000 threshold can choose to register (“voluntary registration”). How much VAT a business can recover depends on the supplies it makes: in the table at paragraph 9.1 of HMRC’s notice on opting to tax (Notice 742A), taxable supplies of land or buildings normally let a business recover the input tax that relates to them, wholly exempt supplies let it recover none, and a business that makes both can recover only the part that relates to the taxable supplies.

Storage that item 1(ka) covers is standard-rated, so an operator providing it is making taxable supplies and, if it is VAT registered, can normally recover the VAT on the containers, fit-out and other costs that relate to them, as that table describes. HMRC’s self storage chapter does not mention recovering VAT, so that is our reading, and whether a particular cost relates to the taxable storage is a question for your accountant.

An option to tax is how an owner makes a supply of land or buildings that would otherwise be exempt standard-rated. HMRC says supplies of land and buildings are normally exempt, so no VAT is payable but the person making the supply cannot normally recover the VAT on their own expenses; once a person has opted to tax, their supplies of that land or those buildings will normally be standard-rated, and they will normally be able to recover the VAT they incur in making them. HMRC also warns that you cannot assume an option will allow input tax recovery. For a yard where customers keep their own containers (see the questions below), an option is one way to make an otherwise exempt letting of land standard-rated, but whether the yard is storage, parking or an exempt letting comes first. An option is not easy to undo: HMRC allows it to be revoked, if the stated conditions are met, within six months of taking effect or once more than 20 years have passed.

Showing prices with VAT

Consumers must be shown the total price, taxes included. Under section 230 of the Digital Markets, Competition and Consumers Act 2024, in force since 6 April 2025, an invitation to purchase must give the total price of the product, and the total price includes any fees, taxes, charges or other payments the consumer will necessarily incur. Our DMCC Act guide sets out what else the price rules ask of a storage operator.

The advertising rules point the same way. The CAP Code requires quoted prices to include non-optional taxes, but allows a price without VAT where everyone it is clearly addressed to pays no VAT or can recover it, and then it must carry a prominent statement of the amount or rate of VAT payable. So a price aimed at business customers can leave out VAT only when all of them pay none or can recover it. An unregistered operator quotes its price with no VAT at all. Our pricing strategy guide covers how to set the price itself.

Questions to put to an adviser

HMRC’s guidance leaves some storage questions open, and others turn on your own figures. Put these to an accountant or a VAT adviser before relying on a reading:

• Is a yard where customers keep their own containers or plant a storage supply, a parking supply or an exempt licence of land?
• Is an open-sided or Dutch barn “fully enclosed”? HMRC gives no test.
• If the farm is on the flat rate scheme, how does providing storage space sit with it?
• Does a connected-party or Capital Goods Scheme situation apply to your building?
• Which of your costs relate to taxable storage, and how much of the VAT on them can you recover?
• Would an option to tax help or hurt on a yard, a barn or a building you let for something other than storage?
• If taxable turnover has already passed £90,000, from which date are you liable?

Sources

All read on 9 October 2026.

• Value Added Tax Act 1994, Schedule 9: Group 1, item 1(ka) and the notes that define self storage and its exceptions.
• Finance Act 2012, Schedule 26, which inserted item 1(ka).
• HMRC’s VAT Land and Property manual chapter on self storage (VATLP17500 to VATLP17900).
• Other chapters of the same manual: VATLP15100 on parking facilities, VATLP17000 on mooring and aircraft storage, and VATLP21400 on touring caravans.
• Value Added Tax Act 1994, Schedule 1 and S.I. 2024/307: the registration and deregistration thresholds.
• HMRC Notice 700/1: should I be registered for VAT?
• HMRC’s Agricultural Flat Rate Scheme notice.
• Value Added Tax Act 1994, section 2, the rate of VAT, and Schedule 11, paragraph 5, on VAT shown on an invoice.
• Finance Act 2008, Schedule 41, paragraph 2 and HMRC’s Compliance Handbook, CH91350: the penalty for an unauthorised invoice showing VAT.
• Digital Markets, Competition and Consumers Act 2024, section 230.
• The CAP Code, section 3, on pricing.
• Value Added Tax Act 1994, section 4: what a taxable supply is.
• HMRC’s Opting to tax land and buildings (Notice 742A), and the gov.uk pages on reclaiming VAT on business expenses and registering for VAT.
• HMRC’s Capital Goods Scheme (VAT Notice 706/2), the scheme the connected-parties exception refers to.