VAT on building work, without the folklore
VAT moves building-work totals by thousands, and the rules are neither as simple as every quote plus 20% nor as loose as folk wisdom says. The published cases below are what a rate can be. The trader decides what it is, and the informed question at quote time is worth more than any assumption. Rules verified 2026-07-18 against the cited official pages.
A business must register for VAT only when its taxable turnover for the last 12 months goes over £90,000, or it expects to pass £90,000 in the next 30 days; smaller businesses can register voluntarily but do not have to. So a trader who neither charges nor shows VAT can be doing exactly what the rules expect, and a missing VAT line is not a warning sign by itself. Figure as verified on the date shown. GOV.UK: Register for VAT, when to register (opens in new tab)
What kind of work, and what does the quote say?
Two separate questions with two separate answers. Neither produces a verdict about your project or your trader: the rules below are what the rate can be, and the trader decides what it is.
The work
Does the quote in front of you show VAT?
What the rate can be, case by case
Work on a new house or flat may carry no VAT at all, but only when it qualifies as genuinely new and self-contained: no internal connections to other homes, independently usable and sellable, proper planning permission, and any existing buildings demolished to ground level unless an existing building is being extended to create the new home. The guidance is explicit about the traps: a granny flat or annexe that cannot be sold separately is standard-rated at 20%, and work after the building is finished cannot be zero-rated apart from correcting defects in the original work.
GOV.UK: VAT for builders, building new homes (opens in new tab)Notice 708 section 7 says work converting premises may be reduced-rated at 5% when the conversion produces a single household dwelling, a different number of single household dwellings, a multiple occupancy dwelling such as bedsits, or premises solely for a relevant residential purpose, each term defined in the notice. Outside those defined outcomes, work on an existing building is normally standard-rated.
Buildings and construction (VAT Notice 708) (opens in new tab)Notice 708 section 8 says renovating or altering an eligible dwelling may be reduced-rated at 5% when the dwelling has not been lived in during the 2 years immediately before the work starts, with a specific occupier exception in paragraph 8.3.4. The condition is evidential, about the property's recent history, which is why the trader and their accountant are the ones who apply it.
Buildings and construction (VAT Notice 708) (opens in new tab)The builders' guidance says installing certain energy-saving, heating and security products in residential property may be reduced-rated at 5%, including the products themselves when the same business installs them; supply without installation is standard-rated at 20%, and where the installation is just part of a bigger job the whole job is standard-rated (its own example: an insulated replacement roof is 20% throughout). Separately, the Boiler Upgrade Scheme administrator states 0% VAT on the installation of energy-saving materials including heat pumps until 31 March 2027, so for those installs the rate conversation belongs with the installer.
GOV.UK: VAT for builders, energy saving and mobility aids (opens in new tab) · Ofgem: Boiler Upgrade Scheme, property owners (the VAT note) (opens in new tab)The default case, in the guidance's own words: 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%. An extension or improvement to an occupied home sits here unless one of the specific cases above genuinely applies.
GOV.UK: VAT for builders (opens in new tab)One rule sits above everything here: the VAT treatment of a quote is decided by the trader, and accounted for by the trader to HMRC. Nothing on this page tells you what your project's rate is. It tells you what the published rules say a rate can be, so the conversation with your trader is an informed one.
Checking a VAT number
HMRC's service checks whether a UK VAT registration number is valid and shows the name and address it is registered to. Its own limitation matters: it cannot tell you whether a business is registered by searching its name, so a number you cannot match is never proof of anything on its own. GOV.UK: Check a UK VAT number (HMRC's own service) (opens in new tab)
Only a VAT-registered business charges VAT, and a VAT invoice shows the registration number it is charged under. HMRC's own service checks whether a UK VAT number is valid and shows who holds it. A number you cannot match there is never proof of anything on its own: typos, trading names and group registrations exist, so the first step is always asking the business, and HMRC is the final word.
What the guides get wrong
It is not. The guidance's default is 20% for most work on houses and flats by builders and similar trades, labour included, and where a zero or reduced rate genuinely applies it covers the qualifying work and materials together, not labour separately.
GOV.UK: VAT for builders (opens in new tab)The guidance is explicit: a granny flat or annexe that cannot be used or sold separately from the main house must be charged at the standard rate of 20%.
GOV.UK: VAT for builders, building new homes (opens in new tab)The opposite: where the energy-saving installation is just part of a bigger job, the whole job is standard-rated. The guidance's own example is an insulated replacement roof, charged at 20% throughout.
GOV.UK: VAT for builders, energy saving and mobility aids (opens in new tab)Only when the same business installs them. Supply without installation is standard-rated at 20%.
GOV.UK: VAT for builders, energy saving and mobility aids (opens in new tab)About cash
Paying cash is not illegal, and a cash payment is not by itself evidence of anything about anyone's tax affairs.
What a missing invoice costs you is practical, not fiscal: without paperwork there is no clean record for a dispute, a guarantee claim, or the file a future buyer's solicitor asks for.
The paper trail is what your consumer rights run on: what the law says at the final bill and which certificates the job should produce.
Comparing quotes?
Read the quote's total line and any small print: plus VAT, including VAT, or silence are three different totals. Ask which one you are looking at, and get the answer in writing before comparing it with any other quote. Run the quote past the official warning signs, see sourced cost guides, or check the business by name.
Common questions
Do builders charge VAT on labour?
A VAT-registered builder charges VAT on the whole supply, labour and materials alike; labour has no special exemption. A builder below the registration threshold legitimately charges no VAT on anything. Where a zero or reduced rate genuinely applies, it covers the qualifying work and materials together.
Is it legal for a builder not to be VAT registered?
Yes. A business must register for VAT only when its taxable turnover for the last 12 months goes over £90,000, or it expects to pass £90,000 in the next 30 days; smaller businesses can register voluntarily but do not have to. So a trader who neither charges nor shows VAT can be doing exactly what the rules expect, and a missing VAT line is not a warning sign by itself. Figure as verified on the date shown.
Is there really 5% VAT on an empty property?
Notice 708 section 8 says renovating or altering an eligible dwelling may be reduced-rated at 5% when the dwelling has not been lived in during the 2 years immediately before the work starts, with a specific occupier exception in paragraph 8.3.4. The condition is evidential, about the property's recent history, which is why the trader and their accountant are the ones who apply it. One rule sits above everything here: the VAT treatment of a quote is decided by the trader, and accounted for by the trader to HMRC. Nothing on this page tells you what your project's rate is. It tells you what the published rules say a rate can be, so the conversation with your trader is an informed one.
What VAT do I pay on an extension?
The default case, in the guidance's own words: 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%. An extension or improvement to an occupied home sits here unless one of the specific cases above genuinely applies.
Do I pay VAT on a new build?
Work on a new house or flat may carry no VAT at all, but only when it qualifies as genuinely new and self-contained: no internal connections to other homes, independently usable and sellable, proper planning permission, and any existing buildings demolished to ground level unless an existing building is being extended to create the new home. The guidance is explicit about the traps: a granny flat or annexe that cannot be sold separately is standard-rated at 20%, and work after the building is finished cannot be zero-rated apart from correcting defects in the original work. Building your own home has its own route: the builders' guidance states there is a separate guide on VAT refunds if you are building your own home, where a self-builder claims back from HMRC after the build. We route you to the official guide rather than restating its mechanics.
This page states the published VAT rules from the cited official sources on the date shown. It is not tax advice, it cannot determine any project's VAT treatment, and it never judges a named business. The trader accounts for VAT to HMRC, and HMRC is the final word.
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