Instantly add or remove VAT on building work. Supports standard 20%, reduced 5%, and zero-rated construction VAT.
Value Added Tax (VAT) is a critical consideration for every UK builder, contractor, and tradesperson. Once your taxable turnover exceeds the registration threshold (currently £90,000), you must register for VAT and charge it on your invoices. Understanding which rate applies to each type of work can save you and your clients significant money.
The standard VAT rate of 20% applies to most building, repair, and maintenance work in the UK. This includes general renovations, extensions, loft conversions, kitchen and bathroom refits, and all commercial construction. If you are VAT-registered, you must charge 20% on top of your net price for these works. Your quotes should clearly show the net amount, VAT, and gross total to avoid any confusion with clients.
A reduced VAT rate of 5% applies to certain qualifying renovation and conversion works. This includes converting a non-residential building into a dwelling, renovating a property that has been empty for at least two years, and installing energy-saving materials such as insulation, solar panels, and heat pumps. The reduced rate can make a significant difference on large projects — for example, saving £15,000 on a £100,000 renovation compared to the standard rate.
Zero-rated VAT (0%) applies to the construction of new residential dwellings and buildings intended for relevant charitable purposes. This means the builder does not charge VAT on the construction, but can still reclaim VAT on materials and subcontractor costs. New-build projects must meet strict HMRC criteria, including being a genuinely new structure built from foundations up, not an extension or renovation of an existing property.