VAT on a Builder's Quote: Included, Excluded or Not Registered?
Two quotes for the same extension. One is £80,000. The other is £72,000. Before you celebrate the cheaper one, check the VAT line. A 20% gap on the same net work is often just tax treatment, not a bargain.
This guide is about VAT on a normal builder's quote for work to an existing home. It is different from the 5% reduced rate for renovating an empty home. Check GOV.UK for the current rules; figures below were checked in October 2026.
Quick answer
- Most building work to an existing occupied home is standard-rated at 20% VAT.
- A VAT-registered builder must charge VAT. Their quote should say whether the price includes VAT, is plus VAT, or show net + VAT + gross.
- A builder below the VAT threshold (currently £90,000 taxable turnover in a rolling 12 months, GOV.UK) does not charge VAT. Their price can look lower like-for-like.
- Always compare VAT-inclusive totals (or put non-VAT quotes next to gross VAT quotes), never headline figures alone.
- Cash "without VAT" from a VAT-registered trader is a warning sign, not a discount.
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Do builders charge VAT?
Often yes. If the builder is VAT-registered, they charge VAT on taxable supplies. For most private homeowners having an extension, loft conversion, kitchen or refurbishment on a home they live in, that is the standard 20% rate.
They may not charge VAT if:
- They are not VAT-registered (turnover under the threshold, and they have not registered voluntarily), or
- The work qualifies for a reduced or zero rate under specific HMRC rules (for example some work on empty homes, or certain new-build situations). Those are narrow. Do not assume; check the category.
The empty-home reduced rate is covered separately: VAT on renovating an empty home.
Included, excluded, or not registered?
Read the small print on every quote:
| What the quote says | What you should use for comparison |
|---|---|
| "£80,000 including VAT" | £80,000 |
| "£80,000 + VAT" or "plus VAT" | £96,000 (assuming standard 20%) |
| "£80,000" and a VAT number, but no VAT wording | Ask. Do not guess. It could jump by 20%. |
| "£80,000" and "not VAT registered" | £80,000 (no VAT to add) |
| No mention of VAT at all | Ask in writing before you accept |
Private consumers should be given clear VAT-inclusive prices. If it is unclear, that is the builder's wording problem, not yours to decode under pressure.
Why a non-VAT-registered builder can look cheaper
A sole trader or small firm under the £90,000 threshold does not add 20%. On a £60,000 net job, that is £12,000 less on the invoice than a VAT-registered competitor charging plus VAT.
That does not automatically mean better value:
- Check the scope is the same (why quotes differ).
- Check insurance, guarantee body membership and track record.
- A firm just under the threshold may need to register mid-job if turnover crosses £90,000. Ask what happens to your price if they register during the works.
- "Not VAT registered" is fine when true. "We'll do it cash without VAT" from someone who is registered is a different conversation.
Cash and VAT
Paying cash is not illegal by itself. Asking for cash to avoid VAT is. If a VAT-registered builder offers a lower price for cash with no invoice, walk away. You lose your paper trail, your rights are harder to enforce, and you may be helping fraud.
Always pay the company named on the quote by bank transfer, against a proper invoice.
How VAT interacts with deposits and stage payments
VAT applies to each taxable supply as it is invoiced. On stage payments, expect VAT on each stage invoice if the builder is registered. Confirm:
- Whether stage amounts are VAT-inclusive
- Whether the deposit invoice includes VAT
- That the sum of stage invoices matches the agreed gross total
Use the deposit and payment schedule checker to see how the money is timed; fix VAT wording on the quote first.
Putting quotes on the same footing
- Mark each quote: includes VAT / plus VAT / not registered / unclear.
- Convert plus-VAT quotes to gross (× 1.20 at the standard rate).
- Flag unclear quotes and ask before comparing.
- Then compare scope, prelims, provisional sums and programme.
The free builder quote comparison tool does the VAT conversion step for you.
Questions to ask
- Does this price include VAT?
- What is your VAT number (if registered)?
- If you are not registered, what happens if you cross the threshold during my job?
- Are stage invoices VAT-inclusive?
- Does any of this work qualify for a reduced rate? (Only ask if your facts might fit; most lived-in home jobs do not.)
The short version
Assume 20% on most work to an existing home unless a specific relief applies. Compare gross totals. Treat missing VAT wording as unfinished business, not a bargain. For empty homes empty for long enough, read the 5% reduced-rate guide instead of this page.
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Frequently asked questions
Do builders charge VAT?
VAT-registered builders charge VAT on most work to existing homes at the standard 20% rate. Builders under the VAT threshold (currently £90,000 taxable turnover) do not charge VAT unless they have registered voluntarily.
Do builders' quotes include VAT?
Only if the quote says so. Look for 'including VAT', 'plus VAT', a VAT breakdown, or 'not VAT registered'. If it does not say, ask in writing before you compare or accept.
Why do some builders quote without VAT?
Usually because they are not VAT-registered. That can make the headline price look lower than a VAT-registered competitor. Compare like-for-like scope and put totals on the same VAT footing.
What is the UK VAT registration threshold for builders?
As of the rules checked in October 2026, you must register if taxable turnover exceeds £90,000 in a rolling 12 months, or will exceed it in the next 30 days. Always confirm on GOV.UK.
Is this the same as the 5% VAT rate for empty homes?
No. Most lived-in home jobs are standard 20%. The 5% reduced rate for renovating a qualifying empty home is a different topic with strict conditions.
Should I pay cash to avoid VAT?
No. Cash to avoid VAT from a VAT-registered trader is a warning sign. Pay the company on the quote by bank transfer against a proper invoice.
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