VAT on new builds is 0%. VAT on home improvements is levied at a standard rate of 20%.
Not fair? We don’t think so.
But did you know that in some cases, home improvement products and services can be completely VAT exempt or qualify for a reduced rate of VAT.
But which products and services qualify for what rate?
VAT-free home improvements
The following home improvements can be completed without installers having to charge VAT prices on their services:
- Construction of a new house or flat
- Supplying or installing goods for a disabled person in their home
- Making alterations to suit a disabled person
New build properties qualify for a complete exemption from VAT: good news for people wanting to build their own dream home.
If you’re supplying or installing particular products for a disabled person you may qualify for a complete VAT exemption.
Likewise, if you’re making alterations to a property to make it easier to use for a disabled person, such as installing bath rails, you may be able to qualify for VAT exemption.
VAT-reduced home improvements
The following home improvements qualify for a reduced rate of VAT. This is generally charged around the 5% mark. For more detailed information, we recommend you consult the HMRC website.
- Converting a residential building into a different residential use
- Converting a building into a house or flat
- Renovating or altering an empty house or flat
- Supplying and installing certain energy saving materials and equipment
- Central heating and hot water system controls
- Draught stripping
- Solar panels
- Wind turbines
- Water turbines
- Ground-source heat pumps
- Air-source heat pumps
- Micro combined heat and power units
- Wood-fuelled boilers
If you’re converting a residential building into a building used for a different residential use, such as knocking down two terraced houses into one, you may qualify for a reduced VAT rate.
Converting a non-residential building into a residential property can also qualify for the reduced VAT rate of 5%.
Renovating or altering an empty property can also help you to qualify for a 5% reduction in VAT.
If you’re installing certain energy-saving materials into a property in order to improve its energy efficiency, you may qualify for a reduced VAT rate. The specific products and services that qualify for a reduced VAT rate are:
Unfortunately, double, triple and secondary glazing is not included in this category, and so do not qualify for a reduced rate of VAT.
The CPA: committed to abolishing VAT on home improvements
The Consumer Protection Association is committed to abolishing VAT charges on home improvement products and services. Join the fight by signing up here.