From 1st March 2021, VAT-registered subcontractors will no longer charge VAT on certain construction services to another VAT-registered business. Instead, the customer will ‘self-account’ for any VAT due – this is known as the Reverse Charge.
What can you claim VAT on new build?
Which Materials Can I Claim VAT Back On?
- All materials normally incorporated in a new dwelling — all construction materials, for example, concrete, blocks, bricks, insulation, sand, cement, plaster, timber, roofing, stairs, windows, guttering, doors, paint, etc.
- Electrical and plumbing materials.
How does VAT work in construction?
Value Added Tax (VAT) is a tax added to the cost of certain goods and services. It is only accountable where the party raising an invoice is VAT registered. In the design and construction sectors most supplies are ‘standard-rated’ and therefore VAT is added to the value of supplies at the prevailing rate of VAT.
Is construction VAT exempt?
Construction services themselves are never VAT exempt, but the VAT rate can vary depending on the work being done and the type of property. The services supplied in the course of the construction or conversion of the buildings above (other than those specifically excluded – see standard rated section).
Are house builders end users?
It is a business who will use the building or structure themselves in their own business either as a building to sell, or to rent out, or for their own use e.g. as offices. Development and property companies and housebuilders are end users because they will rent or sell what they have commissioned.
Do contractors have to pay VAT?
Suppliers are no longer required to charge or receive VAT from their main contractor customers. Instead, main contractors effectively charge themselves VAT on subcontractors’ services, and pay the VAT sums that would have been paid to the subcontractor direct to HMRC in their VAT returns.
What is the VAT rate on construction?
13.5%
Construction contracts are normally chargeable to VAT at 13.5% but certain fittings can be liable to VAT at 23%. Where RCT applies to a construction contract the purchaser of the service must account for VAT on the reverse charge basis*.
What are the rules for VAT on construction?
VAT at 20%, normal VAT rules apply • Construction services specifically excluded from zero-rating such as goods hired (scaffolding), and services such as architectural, surveying, consultancy & supervising • Sale of freehold interest in a new or uncompleted non-qualifying building
When does VAT reverse charge for construction services start?
The introduction of the domestic reverse VAT charge for construction services has changed from 1 October 2019 to 1 October 2020. The VAT reverse charge effective dates have been updated to 2020 within the guidance. A webinar about what sub-contractors need to do for the new ‘VAT reverse charge for construction services’ has been added.
Why do builders charge VAT on zero rated materials?
Retailers and builders merchants charge VAT at the standard rate on most items they sell. Builders charge VAT on ‘building materials’ that they supply and incorporate in a building (or its site) at the same rate as for their work. Therefore, if their work is zero-rated or reduced-rated, then so are the ‘building materials’.
Do you have to pay VAT when you convert a house?
This is especially so in the case of DIY house builders and converters (‘self builders’), who contract VAT-registered builders or tradesmen to carry out construction or conversion services and are charged VAT on those services.
