Construction services taxed at VAT zero or 5% rate
28/07/2022

Whilst most businesses in the UK charge VAT at the standard rate of 20%, there are a number of different VAT rates and exemptions that businesses should be aware of. In the UK, there are three separate VAT rates, the standard rate @ 20%, reduced rate @ 5% and the zero rate @ 0%.

HMRC has published an updated version of their guidance titled VAT rates on different goods and services. The guidance provides a list of goods and services showing which rates of VAT apply and which items are exempt or outside the scope of VAT.

The guidance lists the following construction services which can be taxed at the zero or 5% rate.

Taxed at the zero rate:

  • Substantial reconstructions to protected buildings that are buildings used as a dwelling, for a relevant residential purpose or for a relevant charitable purpose     
  • The installation of a bathroom or lavatory, constructing ramps and widening doorways or passageways for disabled people in their own home   
  • Construction and first freehold or long leasehold sale of a new building for a relevant charitable purpose  
  • Construction and first freehold or long leasehold sale of a new building for relevant residential purposes
  • Construction and first freehold or long leasehold sale of new domestic buildings  
  • First freehold or long leasehold sale of a commercial building converted into a dwelling or dwellings
  • First freehold or long leasehold sale of buildings converted for relevant residential purposes         
  • First freehold or long leasehold sale of buildings converted for relevant charitable purposes         

Taxed at the reduced rate of 5%:

  • Converting existing premises by increasing the number of dwellings within the building 
  • Renovating a dwelling that has been empty for at least 2 years

Newsletter Signup

With our newsletter, you automatically receive our latest news by e-mail and get access to the archive including advanced search options!

» Sign up for the newsletter

Newsfeed Search


Accreditation

ICAEW White

xeroplat

Brighton

19 New Road
Brighton
East Sussex
BN1 1UF

Tel: 01273 321526
Fax: 01273 321565
[email protected]

Rustington

2-4 Ash Lane
Rustington
Sussex
BN16 3BZ

Tel: 01903 772244
Fax: 01903 771071
[email protected]