When working on new build residential properties in the UK, the VAT treatment of materials and labour depends on how you supply them.
✅ Supplying Labour and Materials Together
If you supply and install building materials as part of constructing a qualifying new residential building, you can zero-rate both the labour and the materials.
This applies when:
– The building qualifies as a new dwelling (e.g., it’s built from scratch and meets specific criteria).
– Your services are supplied “in the course of construction.
In this case, the entire supply, labour and materials, can be zero-rated for VAT purposes.
❌ Supplying Materials Only
If you supply building materials without installation (i.e., materials only), this is considered a supply of goods and is subject to the standard VAT rate of 20%, even if the materials are intended for use in a new residential building.
🧱 What Qualifies as Building Materials?
For VAT purposes, “building materials” are goods that are incorporated into the building and become part of it. Examples include bricks, timber, and concrete blocks. However, items like carpets, white goods (e.g., ovens, fridges), and certain electrical appliances are excluded and must be standard-rated, even when supplied and installed.
🛠️ Summary
Supply and install for new build: Zero-rate both labour and qualifying materials.
Supply materials only: Charge standard VAT (20%).
Excluded items: Always standard-rated, even if installed.
If you need assistance determining whether a specific project qualifies for zero-rating or have questions about particular materials, feel free to ask, or book a discovery call here.
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