Quote check
Do builders' quotes include VAT?
Not always, so always ask. Most building work on an existing home, including extensions, loft conversions and renovations, is standard-rated at 20%, so a VAT-registered builder adds 20% to the price. A builder only has to register for VAT once their taxable turnover passes £90,000 a year, so some smaller builders do not charge it. New homes are zero-rated, and some conversions and long-empty homes qualify for 5%.
The question to ask every builder
"Is that price including VAT or plus VAT?" Then put every quote on the same basis before you compare. A quote of £65,000 plus VAT is £78,000 including VAT, which is more than a quote of £72,000 including VAT.
Which VAT rate applies
| Work | Usual VAT rate |
|---|---|
| Extensions, loft conversions, renovations and repairs to an existing home | 20% (standard rate) |
| Converting a building so the number of homes changes, for example a house into flats | 5% (reduced rate), if conditions are met |
| Converting a non-residential building, such as a barn or shop, into a home | 5% (reduced rate), if conditions are met |
| Renovating a home that has been empty for at least two years | 5% (reduced rate), if conditions are met |
| Building a new home | 0% (zero-rated), if conditions are met |
The conditions are set out in HMRC's VAT Notice 708: buildings and construction. A builder who is not VAT registered cannot charge VAT at all; the registration threshold is on GOV.UK.
If your builder is not VAT registered
Their price has no VAT in it, so it can look cheaper than a registered firm's. Compare it with other quotes on an excluding-VAT basis, and remember that materials they buy still carry VAT, which is already inside their price.
How Estiquote handles VAT
The quote checker, the calculator and the app all have a VAT switch. Set it to match the quote and you compare like with like. New-build prices are shown without VAT because new homes are zero-rated.
This is general information, not tax advice. If your project might qualify for a reduced or zero rate, check with your builder or an accountant before work starts.