Domestic building work, including repair, maintenance and improvements are usually charged at the standard rate of 20% VAT.
However, there are a number of circumstances in which VAT on building works is charged at a reduced rate or even zero-rated. For up to date advice please visit www.hmrc.gov.uk or seek independent advice on the opportunities and restrictions.
Owners of empty homes claim a VAT refund by providing evidence that the property has been empty for the required period.
Installation of certain energy efficiency measures
Reduced rates of VAT currently apply to a number of types of building works, such as installing energy saving measures, adapting a building for a disabled person or for converting a non-residential building into a home. More information is available at VAT for Builders.
A reduced VAT rate applies to the installation of the following energy efficiency measures:
- central heating and hot water controls
- draught stripping
- insulation
- solar panels
- wind turbines
- ground source heat pumps
- air source heat pumps
- micro combined heat and power units; and
- wood-fuelled boilers
Change in the number of dwelling units
A 5% VAT rate applies to the cost of renovation work to a building in residential use that results in a change in the number of dwelling units such as dividing a house into flats. There is no reduced VAT rate for DIY. More information can be found at VAT Notice 708.
New dwellings
The supply of new dwellings including labour and materials is zero rated for VAT. More information can be found at zero rating the construction of new buildings.