What VAT do you pay on building work in the UK?

VAT for most work on houses and flats by builders — and similar trades such as plumbers, plasterers and carpenters — is charged at the standard rate of 20%. There are important exceptions, but they only apply if the job meets HMRC’s conditions.

Use the TipYard building VAT checker to walk through the questions, then read the official notice that matches your result before you charge or pay a rate.

The usual rate is 20%

HMRC’s VAT Notice 708 says the construction of a new building and work to an existing building is normally standard-rated. A typical repair, refit, house extension or loft conversion on a home that is already being lived in is usually 20%. Use the building VAT checker for extensions, loft conversions and new-build houses.

When 5% can apply

The reduced rate of 5% can apply, if the conditions are met, to work such as:

• converting a building into a house or flats, or from one residential use to another
• renovating or altering a house or flat that has been empty for at least two years before the work starts — use the building VAT checker

These are set out in VAT for builders — GOV.UK and in VAT Notice 708. Some jobs need a certificate from the customer. If you are not sure the two-year empty test is met, do not guess — read section 8 of the notice or ask HMRC or a VAT-registered adviser.

When 0% can apply

Zero-rating can apply, if the conditions are met, to:

• building a new qualifying house or flat
• certain work for disabled people in their home (see VAT Notice 701/7)
• installing qualifying energy-saving materials, which has a temporary 0% rate from 1 May 2023 to 31 March 2027, then reverts to 5% — see VAT on energy-saving materials and VAT Notice 708/6

A granny flat or annexe that cannot be used or sold separately from the main house is, in HMRC’s own example, standard-rated at 20%. That is explained on Building new homes — GOV.UK.

Materials and “supply and fit”

VAT Notice 708 says retailers and builders’ merchants charge VAT at the standard rate on most items they sell. Builders charge VAT on building materials that they supply and incorporate in the building at the same rate as their work. So if the builder’s work is zero-rated or reduced-rated, the building materials they supply and fit with that work generally follow the same rate — but some items are not “building materials” for VAT and stay standard-rated. Read section 2.2 and section 11 of the notice.

If you buy energy-saving materials and nobody is installing them as part of the supply, that sale is standard-rated. The lower energy-saving rate is about installation, not a DIY shop purchase. See VAT Notice 708/6, section 2.3.

DIY housebuilders

If you are building a new home yourself, HMRC has a refund scheme for VAT paid on qualifying items. For buildings completed on or after 5 December 2023 you must claim no more than 6 months after the building is completed. Details are on Claim a VAT refund if you’re a DIY housebuilder — GOV.UK. HMRC also publishes a separate scheme for certain DIY conversions.