What VAT should and should not be on your building quote
One quote shows VAT and the next one does not, and the gap reads like a discount. Usually it is a threshold, and here is how to get both onto the same basis.
A quote with no VAT on it is not a warning sign. A trader whose taxable turnover sits under the registration threshold does not charge VAT at all, and nothing about that is cash in hand. What matters is that every quote says whether its figure includes VAT, excludes it, or is not chargeable.
The short version
- Registration only becomes compulsory once taxable turnover over the last 12 months passes £90,000, so a smaller trader can quote with no VAT on it and be entirely straight.
- Two quotes are not comparable until both are on the same basis. Get each one to say in writing: inclusive of VAT, plus VAT, or not chargeable.
- Not all work on a home is at 20 per cent. Installed energy-saving materials, conversions that change the number of dwellings and long-empty homes each have their own rate and their own conditions.
- Anyone charging VAT should be able to give you a VAT registration number, and gov.uk will tell you the name and address that number belongs to.
- VAT landing on the invoice when it was never on the quote is a price change, not a formality, and it should be dealt with as one.
The threshold
Why one quote has VAT on it and the next one does not
The usual reason is turnover, not honesty. Under Schedule 1 of the Value Added Tax Act 1994, a trader becomes liable to register once the value of their taxable supplies over the previous 12 months has gone past £90,000, or once there are reasonable grounds for believing it will go past that figure in the next 30 days.
Below that line, registering is a choice rather than a duty. Many one-van roofers, plasterers and bricklayers never reach it, and they put no VAT on a quote because there is none to put.
This is the thing most homeowners get wrong, and it is worth being blunt about. A quote with no VAT line does not mean cash in hand. It does not mean the work is off the books. It does not mean anybody is dodging anything. It means the person quoting is not registered, which is lawful, ordinary, and true of a large share of the trade.
The test runs on a rolling 12 months rather than a tax year, so a trader can cross the line halfway through a busy summer and start charging VAT on jobs they would have quoted differently in March. It works both ways too: someone who has crossed it and expects their turnover to settle back under £88,000 can come off the register again. The same firm can quote with VAT one year and without it the next.
So registration status is a real and legitimate slice of the gap between two figures, which is one of several reasons two quotes for one roof land so far apart. It is also the slice that tells you least about the quality of the work. A registered trader is not better or worse than an unregistered one. They are busier.
Comparing
Inclusive, exclusive, or not chargeable at all
Get every quote onto the same basis before you compare a single line. A figure at the bottom of a builder's quote can only be one of three things. It includes VAT. It excludes VAT, and VAT will be added. Or no VAT is chargeable, because the trader is not registered. Those are three different amounts of money, and the words that tell you which is which are often in the smallest type on the page.
The arithmetic is simpler than it looks. To take a figure that excludes VAT up to what you will actually hand over, add a fifth. To pull VAT back out of a figure that already includes it, divide by six and take that away, because the tax is a sixth of an inclusive total rather than a fifth of it. That second step is the one people get wrong, and it is why a quote marked plus VAT is never as close to an inclusive quote as it first reads.
An illustration, with a round number belonging to nobody. Say a job is priced at £10,000 and the quote says VAT is extra. Add 20 per cent and the amount payable is £12,000. A second quote showing £11,500 with the tax already inside it is the cheaper of the two, even though it carries the bigger number on the front page.
Ask for the position in writing rather than over the phone, and ask at the same time whether the total covers everything the job cannot be done without. Scaffold or waste left sitting outside the figure does more damage to a comparison than VAT ever does. The rest of what should be on the page is covered in what a roofing quote should include.
The other rates
The rates most homeowners never hear about
Most work on an existing home is standard-rated, and HMRC VAT Notice 708 is where the exceptions live. The standard rate is 20 per cent, and the reduced and zero rates below are not loopholes. They are ordinary parts of the building tax rules, and it is worth knowing which one your job falls under.
| Rate | Where it can apply | The condition that decides it | Source |
|---|---|---|---|
| 20 per cent, standard | Most repair, maintenance and improvement work on a home somebody already lives in | This is the default. Everything below is an exception to it | VAT Notice 708 |
| Zero, until 31 March 2027 | Installing certain energy-saving materials in residential accommodation | The materials must be installed by the person supplying them. Sold without installation, they are standard-rated. From 1 April 2027 this reverts to 5 per cent | VAT Notice 708/6 section 2 |
| 5 per cent, reduced | Converting premises so that the number of dwellings changes | The work has to be a qualifying conversion on HMRC's terms, and unrelated work in the same building stays at the standard rate | VAT Notice 708 section 7 |
| 5 per cent, reduced | Renovating or altering a dwelling that has stood empty | Nobody has lived in it during the 2 years immediately before the work starts, and HMRC can ask for proof | VAT Notice 708 section 8 |
The middle column is the whole story. Every one of these rates hangs on conditions HMRC sets, and it is the contractor charging the VAT who has to satisfy them and who carries it if they got it wrong. Describing a job in the right words does not make a rate apply. On the empty-property rate, for instance, proof of the 2 years can be asked for from the electoral roll, council tax records, utility companies or the council's empty property officer. It is a matter of records rather than of what anybody remembers.
The energy-saving materials rate is the one that touches ordinary roofing and insulation work, and there is a trap in it worth knowing before you order anything. VAT Notice 708/6 zero-rates the installation of the materials, and states plainly that a supply of energy-saving materials without installation is standard-rated. Buying the loft insulation yourself and paying somebody to fit it can therefore leave you paying more tax, not less. It also runs on a clock: zero-rated to 31 March 2027, then 5 per cent from 1 April 2027. If you are weighing up insulation work alongside a re-roof, the regulations side of that decision sits in Part L, a re-roof and a loft conversion.
One caveat that matters more than the rates themselves. This page explains what the rates are. It is not tax advice and it cannot tell you which one applies to your job. That is a question for the contractor doing the work and, where it is not obvious, for HMRC. The right thing to ask a builder is which rate they are charging and why. The wrong thing is to push them towards a lower one.
Checking
How to tell whether a trader is actually VAT registered
Ask for the VAT registration number, then check it. A registered business has one, and HMRC's own instruction to registered businesses is that invoices must include the VAT number and display the VAT separately. If VAT is being charged, the number belongs on the paperwork you are handed, not in a drawer somewhere.
gov.uk runs a free service to check a UK VAT number. It confirms whether the number is valid and, more usefully, gives you the name and address it is registered to. Set that against the name and address on the quote. You cannot search by business name, only by number, so you have to get the number out of the trader first. That is a reasonable thing to ask for and there is no good reason to refuse it.
The genuine red flag here is the rare one, and it is the opposite of the one people worry about. A quote with no VAT on it is ordinary. A quote adding VAT from someone who cannot produce a number, or whose number comes back registered to a different business, is the problem, because that money is collected on HMRC's behalf and is supposed to reach them. If the check does not match, stop before you part with anything, which is also the point at which what a deposit should and should not be becomes worth reading.
When it changes
If VAT appears on the invoice and was never on the quote
Treat it as a price increase, because that is what it is. The CMA's guidance on unfair commercial practices says a price given to a consumer will normally be an invitation to purchase, and that an invitation to purchase must carry the total price of the product, including any mandatory fees, taxes, charges or other payments the consumer has to pay.
It also names the practice of showing a headline price and adding mandatory charges further down the line. On a job for a household, VAT is a mandatory charge.
The point is not that the trader may not charge VAT. If they are registered on the date of supply, they must. The point is that the figure they put in front of you should have said so, and the gap is theirs rather than yours to explain. Reply in writing, repeat the figure you were quoted and the date you were given it, and ask for an invoice that matches. Keep the original quote, whatever form it arrived in.
If they hold their position, the argument stops being about tax and becomes a general one about whether the final bill can exceed the quoted figure at all, and about what a properly agreed variation looks like. That is worth reading before you send anything, and it is covered in can a builder charge more than the quote.
Next steps
What to do next
Checking the VAT wording on every quote and putting them on the same basis is fifteen minutes of work, and it usually changes which quote you accept.
- Go through each quote and find the VAT wording. If it is not there, email and ask for it: inclusive of VAT, plus VAT, or not chargeable.
- Put the three figures on one line on the same basis, adding a fifth to any that excludes VAT, so you are comparing what leaves your account.
- Where VAT is being charged, ask for the VAT registration number and run it through the gov.uk checker. Confirm the name and address that come back match the quote.
- If a rate below the standard one has been used, ask the contractor which rate and on what basis. It is their call and their risk, and a straight answer is the point of asking.
- If loft or roof insulation is in the job, ask whether it is being supplied and installed together, because that changes the tax treatment and buying the material yourself may not be the saving it looks like.
- Keep the quote you accepted. It is the document you will need if the invoice arrives carrying something the quote never mentioned.
If you want somebody to walk the job and set out what the work involves in writing, that is what a site visit is for. Thomas comes out, goes over it himself and puts the findings and the work down line by line, so you have something you can genuinely hold next to the other quotes. What is covered is on the roofing page, and you can ask for a free written itemised quote without committing to anything.
Questions
Common questions
Is a builder with no VAT on their quote working cash in hand?
No, and it is the most common misreading of a quote. Registration only becomes compulsory once a trader's taxable turnover over the previous 12 months passes the threshold in Schedule 1 of the Value Added Tax Act 1994. Plenty of smaller traders never reach it, so they charge no VAT because there is none to charge.
Should a building quote include VAT or exclude it?
Either is fine as long as the quote says which. A figure can be inclusive of VAT, exclusive with VAT to be added, or not chargeable because the trader is not registered. Those are three different amounts, so ask for the wording in writing before you compare anything.
How do I check a builder's VAT number?
Use the free check a UK VAT number service on gov.uk. It confirms whether the number is valid and gives the name and address it is registered to, which you can then set against the quote. You cannot search by business name, so ask the trader for the number first.
Can a builder add VAT to the final bill if the quote did not mention it?
Not without agreeing it with you. CMA guidance says a price shown to a consumer must be the total price including any mandatory taxes and charges, and it specifically criticises adding mandatory charges after a headline figure. Reply in writing, repeat the quoted figure and the date, and ask for an invoice that matches.
Is loft insulation zero-rated for VAT?
Installing certain energy-saving materials in residential accommodation is zero-rated until 31 March 2027, reverting to 5 per cent from 1 April 2027, but HMRC is explicit that materials supplied without installation are standard-rated. Whether a particular job qualifies is for the contractor and HMRC, not for the homeowner to decide.
Read next
Related advice
The guides below pick up where this one leaves off, and the roofing page covers the work itself and the places we cover, if you would rather have the job looked at.
Who wrote this
Thomas Hannen
Thomas owns Bournemouth Roofing & Building and prices every job himself instead of sending somebody else. The company is Bournemouth Roofing & Building Ltd, number 15471719, registered in England and Wales. If you want to talk something through before you commit to anything, the site visit and the written itemised quote are both free.
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Thomas comes out himself, looks at the job properly and puts the work in writing line by line, so you can set it against the other quotes you have. The site visit and the written itemised quote are both free.