- Carpets, underlay, most gas and electrical appliances and fitted furniture other than kitchens are 20% whatever the project.
- Building materials take the 0% or 5% rate only when the contractor supplies and fits them.
- Materials sold without fitting and separately supplied professional fees are 20%.
A zero-rated or 5% project is never 0% or 5% on every line. Carpets, most appliances and fitted furniture other than kitchens stay at 20% whatever the project. So do professional fees supplied separately, and materials sold without fitting.
What follows the lower rate
When a contractor's work is zero rated or reduced rated, the building materials they supply and fit take the same rate as the labour. That is how a new build home ends up at 0% on bricks, timber, windows and wiring as well as on the bricklayer's time.
"Building materials" has a legal meaning. The item has to be incorporated in the building, be of a kind builders ordinarily incorporate in that type of building, and not be on the excluded list. The detail is in HMRC's VAT Notice 708.
What is always 20%
- Fitted furniture other than kitchens. Fitted wardrobes are the usual example.
- Most electrical and gas appliances. Ovens, hobs, fridges, washing machines and dishwashers.
- Carpets and underlay.
- Materials sold without fitting. Bricks from a merchant are 20%. The same bricks laid by the contractor building a new house are 0%.
- Professional fees supplied separately. Architects, surveyors and consultants.
The same list applies in a 5% project. In a conversion or the renovation of an empty home, the carpets, appliances and wardrobes are still 20%.
As an example of scale only, a new build quote includes £9,500 of kitchen appliances, £8,500 of carpets and £6,000 of fitted wardrobes. Those three lines total £24,000 and carry £4,800 of VAT, while the construction around them is at 0%.
What people get wrong
- "The whole new build is zero rated." The construction is. The excluded items are not.
- "Charge 20% on everything to be safe." Then the client has overpaid, and VAT charged in error cannot be reclaimed from HMRC by the customer.
- "Every appliance is excluded." Most are. Boilers and alarms are among the exceptions, which is why the list cannot be applied by guesswork.
- "A fitted kitchen includes the appliances." The units follow the rate of the work. The oven and the fridge are 20%.
If excluded items are buried in a zero-rated total, the contractor has undercharged and will usually look to the client for the VAT later. Either way, a quote with one lump sum and one rate cannot be right for a qualifying project.
Where it goes wrong
- Borderline items, where the answer turns on how the thing is built or powered.
- Excluded items buried inside a lump sum or a package price.
- Who actually supplies and fits each item.
- Tenders priced on different VAT assumptions, so the prices are not comparable.
The sensible next step
To find out where your project stands, send us the builder's quote. We will tell you whether there is anything worth pursuing, the fee is fixed and agreed first, and if a line belongs at 20% we will say so.
Questions people ask
Is there VAT on a fitted kitchen in a new build?
Fitted kitchen units are building materials, so they follow the zero rate when the contractor supplies and fits them in a qualifying new home. The appliances do not. Ovens, hobs, fridges, freezers and dishwashers are standard rated at 20%.
Is there VAT on carpets in a new build?
Yes. Carpets, carpeting material and underlay are excluded from building materials by law and are 20% in every project. That is true even when the same contractor fits them under the same contract as the zero-rated build.
Are fitted wardrobes zero rated in a new build?
No. Fitted furniture other than kitchen furniture is excluded, and that covers fitted wardrobes. They are 20% even in a zero-rated new build.