What VAT should you be paying?
Most people assume 20% and never question it. On a £40,000 job that assumption can be worth several thousand pounds, because some work is charged at 5% and some at nothing at all.
Where is the property?
Pick a job to see the rate that should apply.
The rates, and when they apply
| Rate | Applies to |
|---|---|
| 0% | Installing energy-saving materials — heat pumps, solar panels, insulation and, per HMRC, most fixed air conditioning units. Runs until 31 March 2027, then returns to 5%. |
| 5% | A property empty for two years or more, work that changes the number of dwellings in a building, and certain conversions. Also mobility aids for people over 60. |
| 20% | Everything else, which is most repair and improvement work. |
The conditions people miss
- Supply and installation together
- The reduced and zero rates apply where one contractor supplies and installs. Buy the materials yourself and they are standard-rated, even if the labour is not.
- Permanently fixed, not portable
- This is what separates a fitted air conditioning system from a plug-in unit. A portable one is standard-rated however efficient it is.
- The date that counts is completion
- Not when you sign, and not when you pay a deposit. A job signed in March 2027 but finished in April is charged at the later rate.
- Whether the contractor is VAT registered at all
- A firm trading below the threshold charges no VAT on anything. That is not a discount you can ask a larger firm to match, and it is one reason two quotes can differ by a fifth.
What to ask before you sign
- What VAT rate are you charging, and is it shown on the quote?
- Is this quote for supply and installation together?
- If you are not charging VAT, is that because you are not registered?
- Will the work be completed before the rate changes?
A contractor who cannot answer the first of those is not necessarily wrong, but you should get the answer in writing before you commit.
Rates checked against HMRC HMRC VAT Notice 708/6, sections 2.7 and 2.15 on 18 September 2026. This is general information, not tax advice — confirm your own position with your contractor or HMRC. See also how we price.