How Does VAT Apply to Conveyancing Fees for UK Solicitors in 2025/26?

If you handle residential or commercial conveyancing, VAT touches almost every line on the completion statement. Your fee, the searches, the Land Registry, the tax paid for the client and the bank transfer are each treated differently, and the area that most often trips firms up is searches. The treatment changed after the Brabners case, and a position that looked safe for years is now wrong on most files.

This guide walks through the VAT treatment of a conveyancing matter from end to end in the 2025/26 tax year: the firm's own fee, property searches, HM Land Registry registration, the property transaction tax paid for the client, and CHAPS recharges. For the general law on what makes a payment a disbursement, including HMRC's full set of conditions, see our companion guide on the VAT treatment of disbursements for UK law firms. This page focuses on how those rules play out in a conveyancing file specifically.

Are Conveyancing Fees Subject to VAT?

Yes. Legal services provided by a solicitor, including conveyancing, are standard-rated for VAT at 20%. This applies whether you act for a buyer, seller, landlord or tenant, and whether the matter is residential or commercial. There is no exemption for residential conveyancing, despite what some clients assume.

If your firm is VAT-registered (which it will be once taxable turnover exceeds the registration threshold, or if you have registered voluntarily), you charge 20% VAT on your conveyancing fee. The harder question is what else on the bill rides with that fee as part of your taxable supply, and what genuinely sits outside the scope of VAT as a disbursement.

Disbursement or Part of Your Supply?

A cost you pay on a client's matter falls into one of two camps. It is either a genuine disbursement, where you act as a pure agent paying a third party that supplies the client directly, in which case it is outside the scope of VAT and you recharge the exact amount with no VAT added. Or it is part of your own taxable supply, in which case it is standard-rated and you add 20% VAT when you recharge it, even if you label it a disbursement on the bill.

The line is drawn by HMRC's disbursement conditions. The key ones for conveyancing are that the client, not you, received and used the supply, that it was the client's responsibility to pay for it, and that the cost is genuinely additional to your own service rather than something you consumed in order to advise. We set out the full conditions and the documentation HMRC expects in the disbursements guide. The rest of this article applies that test to each cost on a typical conveyancing file.

Property Searches: Why Most Are Not Disbursements

Local authority, drainage, environmental and similar searches were, for a long time, routinely treated as VAT-free disbursements. That position is no longer safe. In Brabners LLP v HMRC [2017] UKFTT 0666 (TC) the tribunal held that where a firm obtains a search, reviews the result and uses it to advise the client, the search is consumed in delivering the firm's own legal service. It is not passed through untouched to the client, so it is part of the firm's taxable supply and carries VAT.

HMRC then withdrew the long-standing concession that had let firms treat postal search fees as disbursements. That withdrawal took effect from 1 December 2020 under Revenue and Customs Brief 6 (2020). Since then there is no general shortcut: an online search and a postal search are judged the same way, on the substance of what the firm does with the result.

In practice this means:

• If you obtain a search, read it, interpret it and report on it to the client, the search fee is part of your standard-rated supply. Add 20% VAT when you recharge it.
• A search fee is a disbursement only where it is genuinely passed through unused and every disbursement condition is met, for example where the search result is handed to the client without your firm interpreting or relying on it in your advice. On most residential and commercial files that is not what happens.

Worked position: on a standard residential purchase you order a local authority search, review what it reveals about the property and flag the points your client needs to know. Because you have used and interpreted the search to advise, it forms part of your taxable supply. You recharge it with 20% VAT added, and you reclaim the input VAT the search provider charged your firm. Treating the same search as a VAT-free disbursement while also reclaiming the input VAT on it is inconsistent, and it is exactly the pattern HMRC looks for on review.

HM Land Registry Fees

An HM Land Registry registration fee paid to register the transfer or the charge is a clean disbursement. The Registry does not charge VAT on it, the supply is to your client, and you recharge the exact amount with no VAT added. Unlike a search, a registration fee is not something your firm consumes to form its advice; it is a fee for an act done for the client. Show it separately on the bill and keep the Registry receipt.

If you combine the registration fee with your own fee on a single invoice, you must clearly separate the disbursement from your standard-rated services. HMRC expects clear itemisation. A single line reading "total fees including disbursements" is not enough to support the VAT treatment.

The Property Transaction Tax You Pay for the Client

The transaction tax you pay to the tax authority on the client's behalf is a genuine disbursement and carries no VAT. It is the client's liability, you pay it as their agent, and you pass on the exact amount. Which tax applies depends on where the property is:

• England and Northern Ireland: Stamp Duty Land Tax (SDLT). The standard residential nil-rate band is £125,000 from 1 April 2025 (it is no longer £250,000). The surcharge for additional dwellings is 5% on top of the standard rates, in force from 31 October 2024.
• Scotland: Land and Buildings Transaction Tax (LBTT). The Additional Dwelling Supplement is 8% from 5 December 2024.
• Wales: Land Transaction Tax (LTT). The higher residential rates open at 5% from 11 December 2024.

None of this affects the VAT treatment of the payment itself; the tax is outside the scope of VAT however it is calculated. What matters for VAT is that you identify the payment clearly as a disbursement on the client invoice and pass on the precise amount. Court fees, where a conveyancing dispute reaches that point, are treated the same way as a clean disbursement.

CHAPS and Telegraphic-Transfer Fees

A CHAPS or telegraphic-transfer fee is a standard-rated recharge, not a disbursement. The bank supplies the transfer service to your firm, not to your client, so when you recharge the fee you add 20% VAT. This holds even though you are moving the client's purchase or completion monies, because the banking service is supplied to you. Treating CHAPS as a VAT-free disbursement is one of the most common errors HMRC finds on conveyancing files, and it is the mirror image of the search problem: in both cases the test is who the third party actually supplies.

Common Pitfalls on a Conveyancing File

• Treating searches as VAT-free disbursements. After Brabners and Brief 6 (2020), a search you read and advise on is part of your taxable supply. Add VAT on the recharge.
• Reclaiming input VAT on searches while billing them as disbursements. You cannot have it both ways. If you reclaim the input VAT, the recharge must carry output VAT.
• Treating CHAPS as a disbursement. The bank supplies your firm, so the recharge is standard-rated.
• Misidentifying the transaction tax. The tax paid for the client is a clean disbursement, but it must be SDLT, LBTT or LTT depending on where the property sits, and clearly flagged as a disbursement on the bill.
• Lumping fees and disbursements together. A single combined line invites HMRC to challenge the whole VAT treatment. Itemise.

Commercial Conveyancing and the Option to Tax

Commercial conveyancing is standard-rated for VAT in the same way as residential work. The added wrinkle is the property itself: a seller may have opted to tax a commercial building, so the purchase price carries VAT. As the buyer's solicitor you advise the client on whether VAT applies to the price and how it interacts with their own VAT position. Your fee, the searches you interpret, and the CHAPS recharge are treated exactly as above; the option to tax sits on the transaction, not on your supply. A VAT-registered client using the property for taxable business purposes can usually recover the VAT on your fees as input tax.

Partial Exemption

Pure conveyancing is standard-rated, so partial exemption rarely bites. It can arise if the firm also makes exempt supplies, for example arranging insurance or certain property finance. Input VAT is then apportioned between taxable and exempt activity under the standard method, subject to the de minimis allowances. If your firm has a mixed supply profile, take advice rather than assuming all input VAT is recoverable.

Record Keeping

For every matter, keep the third-party documentation, your itemised client invoice, and the bank records showing what you paid out. The evidence has to do two jobs: it must support that a clean disbursement (the Registry fee, the transaction tax, a court fee) was genuinely incurred for the client and passed on at cost, and it must support that you charged VAT where the cost (searches, CHAPS) formed part of your own supply. If HMRC reviews the file, that paper trail is what stands behind the numbers.

For the wider compliance picture, see our COFA compliance support page, which covers VAT record keeping alongside the SRA Accounts Rules.

What Changed for 2025/26

The substantive VAT rules for conveyancing are settled: the Brabners position on searches and Brief 6 (2020) continue to govern, and the search and CHAPS treatments described above are unchanged. Making Tax Digital for VAT remains mandatory for all VAT-registered firms, so returns must run through compatible software. From April 2026, Making Tax Digital for Income Tax begins to apply to sole practitioners and partners over the relevant income threshold, which is a record-keeping change rather than a change to how conveyancing VAT works. The point that still catches firms out is not new for the year: it is the search treatment, and the annual review job is to make sure the firm has actually applied it.

Final Thoughts

Conveyancing VAT comes down to one question repeated across the file: did the firm consume this to deliver its advice, or did it simply pay a third party for the client. Searches and CHAPS are the firm's supply and carry VAT. The Land Registry registration fee, the transaction tax paid for the client and court fees are clean disbursements that do not. Get the itemisation and the evidence right and the rest follows. For the underlying law on disbursements, see our disbursements VAT guide; for client account handling on a conveyancing matter, see our SRA Accounts Rules essentials guide. If any part of your firm's VAT treatment is unclear, speak to a solicitor accountant who works with legal practices.