When it comes to paying VAT on building work in the UK it can be confusing and you really need to be aware of the options. The HMRC issued a document that explains it all
VAT may be charged at 0%, 5% or 20% and Notice 708 explains it all. This is worth looking into because if you are considering a building project you could save money with a reduced VAT rate.
20% VAT
Applies to the majority of building work and VAT registered Building Contractors must charge 20% VAT to their clients.
Projects such as renovations or alterations to an existing residential property.
Routine repairs such as new windows, rewiring or roof repairs.
Extensions or conservatories, garden rooms or garages.
Any work done on commercial buildings.
5% VAT
Is applicable to some situations, such as renovations or conversions to domestic properties that have been empty for at least two years.
Proof that the property has been unoccupied is required and agreed with the builder so that the reduced rate is charged.
Projects resulting in a change in the number of residential units, for example changing a block of flats back into one house.
Energy saving improvements to an existing property such as, installing insulation, solar panels, heat pumps or some qualifying central heating systems.
Some repairs or maintenance or alterations to a Listed Building that are lived in.
NB Until March 31st 2027 in Great Britain some energy saving materials are at 0% temporarily - so well worth looking into.
0% VAT
Applies to new builds such as the construction of a new house or flat if they have separate entrances, full facilities, no legal restrictions etc
Residential buildings such as care homes, student halls etc.
Relevant charitable buildings to be used only for charitable purposes.
Associated works and materials, that are "ordinarily incorporated" into a building that qualifies as 0% rated when applied by the main contractor.
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