I’m a builder and I want to understand when do I zero-rate my supply? What happens if I install goods with my services – can I zero-rate the goods as well? Does this matter if I’m a subcontractor?
Here’s a quick summary of zero, reduced and standard rated work:
1 ZERO RATED
-applies to NEW & QUALIFYING BUILDINGS below:
1. Construction of a dwelling (house or flat)
2. Construction of a building solely for a RELEVENT residential purpose (“RRP”) (nursing home, school buildings, student accommodation etc)
3. Construction of a building solely solely for a RELEVENT charitable purpose (“RCP”).
– materials on their own are standard rated. However, materials supplied with labour is zero rated. White goods like fridges are not zero-rated – only goods that are incorporated into the buildings are zero-rated.
– Professional fees like architect fees are always standard rated.
– However, design & build contracts where both the design and construction is under a single form of contract allows zero-rating of such services.
You can also zero rate when:
• Supplying or installing goods for a disabled person in their own home
• Making alterations to suit a disabled person
2 REDUCED RATE
• Converting a building into a house or flat
• Renovating or altering an empty house or flat
• Supplying and installing mobility aids for elderly people
• Supplying and installing certain energy saving materials and equipment
• Supplying and installing certain heating systems and security goods when grant funded
• Connecting or reconnecting to the mains gas
• Converting a residential property into a different residential use – eg a house into flats
3 STANDARD RATE
• All other construction work including for example,
• Building an extension, annex or granny flat
• Loft conversions
• Repairs and renovations
If you are working on a building that will be for mixed use then you have to account for VAT separately e.g. a shop (SR) with a flat over (ZR).