VAT-free home improvements

12 Sep 2014

VAT on home improvements is set at the standard 20% but can be VAT-free in certain cases, such as supporting the disabled or construction of a new property.

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?

Which home improvements are VAT-free?

The following home improvements can be completed without installers having to charge VAT prices on their services:

  • Construction of a new house or flat - New build properties qualify for a complete exemption from VAT, which is good news for people wanting to build their own dream home.
  • Supplying or installing goods for a disabled person in their home - If you're supplying or installing particular products for a disabled person you may qualify for a complete VAT exemption.
  • Making alterations to suit a disabled person - 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. Happy homeowners: abolish VAT on home improvements

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 - 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 building into a house or flat - Converting a non-residential building into a residential property can also qualify for the reduced VAT rate of 5%.
  • Renovating or altering an empty house or flat - Renovating or altering an empty property can also help you to qualify for a 5% reduction in VAT.
  • Supplying and installing certain energy saving materials and equipment - 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:
    • Central heating and hot water system controls
    • Draught stripping
    • Insulation
    • Solar panels
    • Wind turbines
    • Water turbines
    • Ground-source heat pumps
    • Air-source heat pumps
    • Micro combined heat and power units
    • Wood-fuelled boilers

Unfortunately, double, triple and secondary glazing are 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.