What VAT rate do builders charge?

Most building work is charged at the standard rate of 20%. New-build homes are 0%, qualifying conversions and homes empty for 2 years are 5%, and fitting energy-saving materials in homes is 0% until 31 March 2027.

The rate depends on the job, not the trade. A bricklayer can charge 20% on one site and 0% on the next. It also only matters if you are VAT-registered: a builder who is not registered adds no VAT at all. The detail is in HMRC's VAT Notice 708 for building work and Notice 708/6 for energy-saving materials, both checked on 16 October 2026.

The rates for common building work

Materials follow the work

When you supply building materials and fit them, they take the same rate as your work. So the bricks, blocks and timber on a zero-rated new house are zero-rated too. But some items are not "building materials" in the VAT sense. Fitting carpets or fitted bedroom furniture during a 5% conversion or empty-home renovation is still 20%, as is putting up and taking down scaffolding on those jobs. Builders' merchants charge 20% on most things they sell.

Energy-saving materials until 31 March 2027

The zero rate covers installing these in homes: insulation for walls, floors, lofts and pipes; draught stripping; heating and hot water controls; solar panels; air, ground and water source heat pumps; wind and water turbines; micro combined heat and power units; wood-fuelled boilers; and, since 1 February 2024, batteries and smart diverters. From 1 April 2027, Notice 708/6 says these installations revert to 5%.

Two catches for trades. First, it has to be installed: selling the materials alone is 20%. Second, it depends on what the job really is. HMRC's examples:

• insulation fitted while building an extension is part of a single 20% job, because the extension is the main thing
• a central heating system with a conventional boiler is 20%, even though the controls on their own would qualify
• the same system with an air, ground or water source heat pump is 0%

Empty homes and conversions

The 5% rate for renovating an empty home only applies if nobody lived there in the 2 years immediately before you start. A second home used now and then counts as lived in. HMRC accepts a letter from the council's Empty Property Officer as proof, or evidence such as council tax and electoral roll records. Keep it on file, because you may be asked for it.

For conversions, work that needs planning consent or building control approval that has not been given is 20%.

What this means for you

Work out the rate before you price the job, not when you invoice it. Charging 20% on work that qualifies for 5% makes you dearer than you need to be. Charging 5% or 0% without the conditions being met leaves you owing HMRC the difference.

As a subcontractor, you can usually zero-rate or reduce-rate your work according to the building, just as the main contractor does. There are exceptions. For example, a subcontractor must charge 20% on certain empty-home work for an occupier who has just moved in.

The VAT domestic reverse charge applies to standard- and reduced-rated building services between VAT-registered businesses in the Construction Industry Scheme (CIS), unless the customer tells you in writing that it is an end user or intermediary supplier. Zero-rated work is outside it. See the reverse charge for construction for how that changes your invoices.

Steps to check the rate for a job

1. Ask what the building is: an existing home, a new dwelling, a conversion, or a home empty for 2 years or more.
2. Find the matching row in the table above and read that section of Notice 708 or 708/6.
3. Get any certificate or evidence the notice asks for, such as proof the property has been empty.
4. Split out anything that stays at 20%, such as carpets, scaffolding hire or design fees.
5. Check whether the customer is a VAT-registered contractor under CIS, and whether it has told you in writing it is an end user, so you know if the reverse charge applies.
6. Show the rate clearly on your quote and your invoice.

Not yet registered? See how to register for VAT as a sole trader. For Making Tax Digital for Income Tax, use the free MTD check, and the trades section has more guides for the building trades.