Rates at a glance
| Work or supply | Rate |
|---|---|
| Construction services for a new dwelling | 0% |
| Building materials supplied and fitted by the contractor | 0% |
| Garage built at the same time, for use with the home | 0% |
| Carpets, appliances and fitted furniture other than kitchens | 20% |
| Architects', surveyors' and consultants' fees | 20% |
| Materials bought on their own, not fitted by the supplier | 20% |
The rate for your project depends on its facts. Each line of a quote is rated on its own.
Does yours qualify?
The headline tests. All of them have to hold.
- The new building is a self-contained home.
- The work is the construction of a new building, not the conversion, reconstruction or alteration of an existing one.
- Planning consent has been granted for the home, and it is built in line with that consent.
Plus 3 further points we test. These are the ones that are easy to miss, and any one of them can change the answer. A qualification report works through every one against your documents.
About the qualification reportWhere projects go wrong
- An extension or an annexe. Building onto an existing house is 20%, unless the result is a separate dwelling that can lawfully be used and sold on its own.
- Treating excluded items as building materials. Carpets, white goods and fitted bedroom furniture are 20% even in a zero-rated build.
We check for 4 more pitfalls on every project of this kind. Most only come to light once the work has been invoiced, which is the expensive time to find them.
What it can be worth
A four-bedroom detached house
A main contractor prices a new detached house at £420,000 before VAT. The first draft of the quote shows 20% across the board.
| Item | Net | Rate | VAT |
|---|---|---|---|
| Substructure, frame and envelope | £236,000 | 0% | £0 |
| Roofing, windows and doors | £58,000 | 0% | £0 |
| Heating, plumbing and electrics | £47,000 | 0% | £0 |
| Fitted kitchen units and worktops | £21,000 | 0% | £0 |
| Drive, drainage and boundary fencing | £34,000 | 0% | £0 |
| Kitchen appliances | £9,500 | 20% | £1,900 |
| Carpets | £8,500 | 20% | £1,700 |
| Fitted wardrobes | £6,000 | 20% | £1,200 |
| Total | £420,000 | £4,800 |
- VAT if quoted at 20% throughout
- £84,000
- VAT rated line by line
- £4,800
- Difference
- £79,200
An example to show how the rates fall across a typical new build. It is not a figure for your project.
How we help with new build homes
Send us the builder's quote and the planning consent, and we establish whether the project is a new dwelling for VAT and which parts of the price follow the zero rate. You get a clear answer on whether it qualifies, with the reasoning written down so your builder and your accountant can follow it. If part of the job is correctly 20%, the answer says which part.
A line-by-line analysis then gives you the right rate for every part of the quote and a letter your builder can work from. It is best done before the contract is signed, while the design and the quote can still change. If you are building your own home, our guide to self-build VAT reclaims explains the scheme. To start, send us your quote.
Questions
Can I reclaim VAT on materials I buy myself?
If you are building your own home to live in, the DIY housebuilders scheme lets you reclaim the VAT on building materials you buy, in one claim made to HMRC within six months of completion. The claim is yours to submit. We can tell you what will and will not qualify before you spend the money.
Is a granny annexe a new build for VAT?
Usually not. An annexe is normally treated as an enlargement of the existing house and is standard rated. It is only zero rated where it is a self-contained dwelling and the planning consent allows it to be used and sold separately from the main house.
We are knocking down a house and rebuilding. Is that a new build?
It can be, if the old building is demolished completely to ground level before the new one goes up. Keeping walls, other than a facade the planners insist on, turns the job into an alteration and the zero rate is lost.
Based on the Value Added Tax Act 1994 and HMRC's published guidance. This page explains how the rules work in general. It is not advice on your project, and no rate applies until the facts have been analysed.
