In certain circumstances, building and construction work may qualify for zero rated or reduced rated VAT. This factsheet outlines key conditions where these VAT treatments may apply.
Zero rated
You may be able to zero rate your supply if you are involved in constructing a ‘qualifying building’. A qualifying building can be:
- A building ‘designed as a dwelling’
- A building that will be used solely for a ‘relevant residential purpose’
- A building that will be used solely for a ‘relevant charitable purpose’.
The adaptation of a dwelling for a person with disabilities can also be zero rated. Such building works could include:
- Installing ramps or widening doorways and corridors
- Adapting bathrooms, washrooms, and toilets
- Installing lifts
Reduced rate (5%)
The installation of certain energy saving products in dwellings and relevant residential property (but not charitable) may also be charged at reduced rate (5% VAT). These include:
- Insulation materials
- Solar panels
- Wind or water turbines
- Wood-fuelled boilers
If your customer is over 60 you can charge reduced rate on certain mobility aids. These include:
- Grab rails
- Ramps
- Stair lifts
- Bath lifts
- Built-in shower seats or showers with built-in seats
- Walk-in baths with sealable doors
Most work to an existing building will be subject to VAT at the standard rate. However, you may be able to charge reduced rate VAT if you are converting premises into a dwelling or premises intended for use solely for a ‘relevant residential purpose’.
This is not intended to be a complete list of when building and construction work can be zero or reduced rate for VAT and the guidance on this subject is much more detailed than this page could ever cover.
If you would like to discuss this in more detail relating to your business, please feel free to book a free online meeting.
