CIS, VAT and MTD, 29 October 2026
VAT on domestic vs commercial building work: which rate and when
Most building work in the UK is standard-rated at 20% VAT, whether the client is a homeowner or a business. Repairs, maintenance, refurbishments and extensions to existing homes are all 20%. The exceptions depend on the work: building a new home is 0%, converting a building into homes or renovating one empty for two years is 5%, and installing energy-saving materials is 0% until 31 March 2027.
Why doesn't "domestic" mean a lower VAT rate?
Because the VAT rules on buildings are about what you're building or changing, not who's paying. A kitchen refit for a homeowner and a shop refit for a retailer are both 20%. GOV.UK says most building work on houses and flats, including work by plumbers, plasterers and carpenters, is charged at the standard rate.
The difference that domestic customers do make is on the reverse charge. Homeowners aren't VAT-registered, so you always charge them VAT if you're registered. Commercial customers who are VAT and CIS-registered may get a reverse charge invoice instead. See does the reverse charge apply to my invoice for that question.
Which rate applies to which job?
Labour and qualifying building materials on a new dwelling are zero-rated. Work after completion generally isn't, apart from correcting defects.
Then 5% from 1 April 2027. If the energy-saving work is part of a bigger standard-rated job, the whole job is 20%.
Check the conditions in VAT Notice 708 sections 7 and 8, and keep evidence such as council tax records for the empty period.
Repairs, maintenance, extensions and refits on existing buildings are standard-rated, domestic or commercial.
| Job | Usual rate |
|---|---|
| Extension, loft conversion or kitchen refit on an existing home | 20% |
| Shop, office or pub refit | 20% |
| Boiler replacement (not grant-funded) | 20% |
| Building a new house, labour and qualifying materials | 0% |
| Air source heat pump or solar panels fitted to a home, on its own | 0% until 31 March 2027 |
| Converting a barn or office into flats | 5% |
| Turning one house into two flats | 5% |
| Renovating a house empty for 2 years or more | 5% |
How do you split a quote across two rates?
When a job contains separate pieces of work at different rates, you can apportion the price on a fair and reasonable basis. If you don't apportion, none of the work can take the lower rate. The catch is that energy-saving work only gets its own rate when it's distinct from the main job. The roof-and-insulation example on GOV.UK is 20% throughout, because the insulation is part of the new roof.
A loft conversion with a separate solar and battery job
A homeowner asks an electrician-builder to quote a loft conversion and, as a separate order, solar panels and a battery on the other roof slope.
| Loft conversion, labour and materials20% standard rate | £18,000 |
| VAT on the loft conversion20% × £18,000 | £3,600 |
| Solar panels and battery, supplied and fitted0% until 31 March 2027 | £6,000 |
| VAT on the solar job0% × £6,000 | £0 |
| Total to the client£18,000 + £3,600 + £6,000 | £27,600 |
Solar firms bidding for 20 and winning one.
In a market that tight, a quote with the wrong VAT rate loses the job or loses the margin. Solar, heat pumps and EV chargers are often quoted side by side, and they don't share a rate: solar panels, batteries and heat pumps are on HMRC's energy-saving list, EV chargers are not. Since 26 August 2026, HMRC lists EV charging points as zero-rated building materials when fitted as part of building a new home.
What changes on 1 April 2027?
The zero rate on installing energy-saving materials in homes runs until 31 March 2027. From 1 April 2027 these installations go back to the 5% reduced rate. The list includes insulation, draught stripping, heating and hot water controls, solar panels, wind and water turbines, ground, air and water source heat pumps, micro CHP, wood-fuelled boilers, and, since 1 February 2024, batteries and smart diverters. Groundworks to lay pipework for a ground source heat pump are covered too.
In Northern Ireland the same zero rate has applied since 1 May 2023. HMRC's consumer guidance describes different conditions for some installations in Northern Ireland, so check Notice 708/6 before you quote there.
What about materials, supply-only and commercial new builds?
Building materials you supply and fit take the same rate as the work. Some things aren't building materials and stay at 20% even on a zero-rated new build, such as carpets and fitted bedroom furniture. Supplying energy-saving products without fitting them is 20%.
Commercial new builds, such as a new office or warehouse, are standard-rated. Certain communal residential buildings (care homes, student accommodation, hospices) and buildings used for a relevant charitable purpose can be zero-rated with a certificate from the customer. Without the certificate, charge 20%.
These rules have conditions this page can't cover in full. For conversions, empty homes and anything certificated, ask your accountant to confirm the rate before you price.
Where Nexley fits
Nexley is the AI back office for UK trade firms: five AI assistants run your tenders, quotes, buying, scheduling and invoicing. It connects to the tools you already work in, you run it all from WhatsApp, and you approve everything. £799 a month.
For VAT, Nexley drafts each quote and invoice with the rate set per line, so a loft conversion at 20% and a separate solar job at 0% sit on the right lines, and it flags jobs where the rate depends on evidence you need to hold. You check the draft in WhatsApp and approve it.
Common questions
Is a home extension zero-rated?
No. An extension to an existing home is standard-rated at 20%, even if it creates a lot of new floor space. Zero rating is for new, self-contained dwellings that can be used independently of any other property.
Can I charge 5% on a house renovation?
Only if the home hasn't been lived in for the 2 years before work starts, or the work is a qualifying conversion. Keep evidence such as council tax or electoral roll records, or a letter from the council's empty property officer.
Is an EV charger installation zero-rated?
EV chargers aren't on HMRC's list of energy-saving materials, so fitting one to an existing home is charged at the standard rate. Since 26 August 2026, one fitted as part of building a new home is zero-rated with the rest of the build. Solar panels, batteries and heat pumps are on the energy-saving list.
Do I charge VAT if I'm not registered?
No. If you're below the £90,000 threshold and not registered, you can't charge VAT on any job. See VAT registration for trades.
Sources
- GOV.UK: VAT for builders, houses and flats
- GOV.UK: VAT for builders, building new homes
- GOV.UK: VAT for builders, energy saving and mobility aids
- GOV.UK: VAT for builders, other types of building
- GOV.UK: Buildings and construction (VAT Notice 708)
- GOV.UK: Energy-saving materials (VAT Notice 708/6)
- GOV.UK: VAT on energy-saving products
Every rule, rate and date above was checked against these sources on the date shown at the top.
Topic: CIS, VAT and MTD
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