VAT for builders

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1. Houses and flats

VAT for most work on houses and flats by builders and similar trades like plumbers, plasterers and carpenters is charged at the standard rate of 20% - but there are some exceptions.

Zero rate VAT

You may not have to charge VAT on some types of work if it meets certain conditions, including:

There鈥檚 a separate guide on VAT refunds if you鈥檙e building your own home.

Reduced rate VAT

You may be able to charge the reduced rate of 5% for some types of work if it meets certain conditions, including:

Find out how to work out VAT on building work (VAT Notice 708).

Buildings that are not houses or flats

You do not need to charge VAT for construction work on certain other types of building.

2. Building new homes

You may not have to charge VAT on labour or building materials for work you do on a new house or flat.

What counts as new

For work to be zero-rated for VAT, it must qualify as a genuinely new, self-contained house or flat. This means:

  • it鈥檚 self-contained - there are not any internal doors or connections to other houses or flats
  • it can be used independently of any other property, including businesses
  • it can be sold on its own
  • it has proper planning permission
  • any existing buildings on the site have been demolished completely to ground level (unless you鈥檙e extending an existing building to create a new house or flat)

Example

A 鈥榞ranny flat鈥� or annexe you鈥檙e building as an addition to an existing house cannot be used or sold separately to the main house. This means you must charge VAT at the standard rate of 20%.

For mixed-use buildings, like a shop with a flat above it, only the work on the residential part can be zero-rated for VAT.

Find out more about qualifying buildings for zero-rated VAT.

Timing, labour and materials

Work that鈥檚 zero-rated for VAT must take place during the construction project, or be closely related to it (for example, demolishing existing buildings and preparing the site). This is known as work done 鈥榠n the course of construction鈥�.

You cannot zero-rate work you do after a building鈥檚 finished, apart from correcting defects in the original work (鈥榮nagging鈥�).

All labour on a qualifying building can be zero-rated, but there are special rules on what counts as building materials for VAT purposes.

3. Work for disabled people

You may not have to charge VAT on alterations you make to a disabled person鈥檚 home, or certain equipment you supply for their personal use.

Who qualifies as 鈥榙isabled鈥�

To be zero-rated for VAT, the work you鈥檙e doing needs to be for someone with a:

  • physical or mental impairment that has a major long-term effect on their ability to do everyday activities
  • condition that the medical profession treats as a chronic sickness (for example, diabetes)
  • terminal illness

Someone who鈥檚 temporarily disabled or incapacitated, or elderly and frail but not disabled, does not qualify. However, you may be able to charge reduced-rate VAT at 5% on mobility aids, heating and security work for people over 60.

Alterations

Work on a disabled person鈥檚 home that can be zero-rated includes:

  • building a ramp
  • widening (but not building) a doorway or passage
  • installing, extending or adapting a bathroom, washroom or lavatory to suit their condition
  • installing, repairing or maintaining a lift used to help them move between floors
  • preparation and restoration of the immediately surrounding decor

Find out more about alterations that can be zero-rated for VAT.

Equipment designed for disabled people

You do not have to charge VAT if you supply, install, repair, maintain or adapt certain equipment specifically designed for disabled people if it鈥檚 for personal use in their home. This includes:

  • adjustable beds
  • hoists
  • chair and stair lifts
  • sanitary devices
  • alarms
  • parts and accessories for qualifying equipment
  • the cost of adapting something for a disabled person

Find out more about zero-rated goods and services for disabled people.

There are different rules for equipment paid for or arranged by the NHS or any other hospital or nursing home.

Evidence of eligibility

You鈥檙e responsible for making sure that your customer is eligible for zero-rate VAT, and you should be able to prove this from your records.

You can do this by getting your disabled customers (or a parent, guardian, doctor or another responsible person if they鈥檙e not able) to sign a declaration containing information that shows they鈥檙e eligible.

A declaration must be separate (or clearly different) from any order form or invoice for goods or services.

4. Energy saving and mobility aids

You may be able to charge the reduced rate of VAT (5%) for work in residential properties to install:

  • certain energy-saving, heating and security products
  • mobility aids for people over 60

This includes the cost of the products themselves if you install them - but if you only supply them you must charge the standard rate of 20%.

Energy saving, heating and security

You can charge the reduced rate of VAT on work you do to install qualifying energy-saving products, and certain grant-funded heating and security equipment for people over 60 or on benefits.

You can also charge the reduced rate for extra work you need to do as part of the installation. But you must charge the standard rate of 20% on all work if the installation is just part of another, bigger job.

Examples

You have to cut a new hatch in the ceiling to install loft insulation. Because you needed to do this as part of the insulation, you can charge reduced-rate VAT.

You replace a roof with a new, insulated one. Because the insulation is just part of a bigger job, you have to charge the standard rate of 20% on the whole job.

Find out more about reduced-rate VAT for energy-saving products and grant-funded heating and security.

Mobility aids

You can charge the reduced rate of VAT on work you do to install certain mobility aids for people over 60, either in their own private home or in a private home that they share with their friends or relatives.

5. Other types of building

You may not have to charge VAT for some work you do on certain types of buildings that are not houses or flats, including:

There are also certain other types of communal residential building that you do not have to charge VAT on, including:

  • children鈥檚 homes
  • residential care homes
  • hospices
  • student accommodation
  • school boarding houses
  • armed forces鈥� accommodation
  • monasteries, nunneries and similar buildings