VAT calculator for builders
Add VAT to a net price or take it off a gross one, at the standard, reduced or zero rate. Below are the construction VAT rules that most often catch builders out.
- Total including VAT
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- Net (before VAT)
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- VAT
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The formulas
- Adding VAT: VAT = net × rate. At 20%, £1,000 + £200 = £1,200.
- Removing VAT: net = gross ÷ (1 + rate). At 20%, £1,200 ÷ 1.2 = £1,000. A common mistake is taking 20% off the gross, which gives £960 and is wrong.
- The VAT fraction of a 20% gross price is 1/6; at 5% it is 1/21.
Which rate applies to building work?
Most construction work is standard-rated at 20%. The main exceptions, set out in HMRC's VAT Notice 708 (Buildings and construction), are:
| Work | Usual rate |
|---|---|
| Building a new home (new-build dwelling), for the person building it | 0% |
| Installing qualifying energy-saving materials (insulation, heat pumps, solar panels) in homes | 0% (a temporary relief; check the end date) |
| Renovating a home that has been empty for at least 2 years | 5% |
| Converting a non-residential building into homes, or changing the number of homes in a building | 5% |
| Extensions, repairs, refurbishment, kitchens and bathrooms on lived-in homes | 20% |
The conditions are detailed and evidence is often needed, so read VAT Notice 708 on GOV.UK or ask an accountant before you quote at a reduced rate. Charging too little VAT means you pay the difference.
The domestic reverse charge
Since 1 March 2021, when a VAT-registered subcontractor supplies construction services to a VAT-registered contractor under the Construction Industry Scheme (CIS), the customer accounts for the VAT, not the supplier. The subcontractor's invoice shows the VAT but says it is subject to the domestic reverse charge, and the contractor pays the net amount. It does not apply to work for the end user, such as a homeowner.
Tips
- Quote homeowners prices including VAT, or state clearly that VAT is extra. Surprises cause disputes.
- If you are not VAT registered, you cannot charge VAT, but you also cannot reclaim it on materials, so build that into your price.
- Price the job first with the profit calculator, then add VAT.
Questions
How do I work out VAT backwards?
Divide the gross price by 1.2 for 20% VAT (or 1.05 for 5%) to get the net price. The VAT is the difference.
Is building an extension zero-rated?
No. Extensions and alterations to an existing lived-in home are normally standard-rated at 20%.
Do I charge VAT under the reverse charge?
You show it on the invoice but do not collect it; your VAT-registered CIS contractor customer accounts for it. It does not apply to work for homeowners.
Results are estimates for planning and ordering. Check quantities with your supplier and product data sheets, and anything structural or regulated with a qualified professional. See our terms.