5% VAT renovation calculator
UK only. Some renovation work is charged at the reduced rate of VAT rather than the standard rate, and on a serious refurbishment the difference is five figures. This checks whether your job looks like one of the qualifying categories, works out what the reduced rate is worth on your own spend, and gives you the evidence list to hand your contractor. Free, no sign-up, nothing sent anywhere.
An indicator, not advice, and not a decision. Your contractor charges the rate and carries the risk. Everything is worked out in your browser and nothing you type is uploaded. Last updated 8 August 2026.
Read this first, it is the part people get wrong
You do not claim this back. There is no form and no refund. The contractor decides what rate goes on their invoice, so the conversation has to happen before you sign, and your job is to make saying yes easy by handing over evidence. If the invoice has already been issued at the standard rate, it can sometimes be corrected, but it is far harder than getting it right first time.
1. The property and the work
These questions follow the categories HMRC sets out in VAT Notice 708. They are a filter, not a ruling.
2. The spend
All figures excluding VAT. The split matters: only the contractor’s own supply of services and the building materials they provide with those services can take the reduced rate.
3. The rates
Typed by you rather than hard-coded, so this page does not quietly go wrong the day a rate moves. At the time of writing the UK standard rate is 20% and the reduced rate is 5%. Check yours if you are reading this later.
What to put in front of your contractor
The contractor carries the risk of getting the rate wrong, so evidence is what turns a maybe into a yes. Gather these before you ask. The list changes with your answers above.
How the 5% VAT saving is worked out
The eligibility question is the hard part. The arithmetic underneath it is four lines.
Qualifying spend = contractor's price - fittings that stay standard rated
Standard-rated = those fittings + your own materials + professional fees
VAT at your rate = Qualifying x reduced rate + Standard-rated x standard rate
VAT all at standard = (Qualifying + Standard-rated) x standard rate
Difference = Qualifying x (standard rate - reduced rate)That last line is the one worth remembering. The saving does not depend on your professional fees, your own materials or the total size of the project. It depends only on how much of the work is inside the contractor’s qualifying supply, multiplied by the gap between the two rates. At 20% and 5% that gap is fifteen pence in the pound.
Why buying materials yourself costs you money on a qualifying job
The reduced rate attaches to a supply of services together with the materials used in them. Walk into a merchant with your own card and you have made a purchase of goods, which is standard rated, and no amount of evidence about the property changes that. On a job that qualifies, every £1,000 of materials moved from your card to the contractor’s invoice is worth £150 while the rates stand where they are.
That is not a reason to hand a contractor a blank cheque. Their materials margin can easily eat the saving. It is a reason to price it both ways and to say out loud why you are asking.
The example that gets quoted everywhere
An £80,000 refurbishment, all of it qualifying work by the contractor. At the standard rate the VAT is £16,000. At the reduced rate it is £4,000. The difference is £12,000, which is where the number you keep seeing on council empty-homes pages comes from. Real jobs are messier, which is why this calculator splits the spend rather than applying one rate to everything.
The qualifying categories, in plain English
Summarised from VAT Notice 708 and the HMRC guidance for builders working on houses and flats. The notice is long and has exceptions this summary does not carry.
The empty home rule
Renovation or alteration of a single household dwelling that has not been lived in during the two years immediately before the work starts. The clock runs to the day the work begins, not to the day you bought it or the day you started planning. A tenant who moved out eighteen months ago breaks it. A relative who stayed for a fortnight last summer breaks it. This is a factual test, and the burden of showing it falls on you long before it falls on HMRC.
A change in the number of dwellings
A conversion where the number of dwellings in the building before the work is different from the number after it. One house into four flats qualifies. Four flats back into one house qualifies. A loft conversion that adds a bedroom does not, because the number of dwellings has not changed. The finished dwellings normally have to be self-contained, with no planning condition preventing them being used or sold separately.
Converting something that was not residential
A barn, an office, a pub, a chapel, turned into a dwelling or into a building for a relevant residential purpose. The building has to have been non-residential for the qualifying period, which is where conversions of places that were flats above shops get complicated.
Building a new dwelling
Not the reduced rate at all: new build residential construction is zero rated in the contractor’s hands, which is better again. If you are project-managing a self-build and buying materials yourself, look at the DIY housebuilders scheme, which is a genuine refund route and one of the few places where a private individual really can reclaim VAT.
Energy-saving materials
This one has moved repeatedly and is scheduled to move again, so the calculator does not hard-code it. Installations of qualifying energy-saving materials in residential property have been zero rated in Great Britain under a time-limited relief with the reduced rate due to return afterwards, and Northern Ireland has its own history. Read the current position on the HMRC notice for energy-saving materials, then type the rate in.
What this page deliberately does not do
It does not tell you that you qualify. It has not seen your council tax records, it does not know what the planning condition says, and it cannot read the notice’s exceptions for you. The output is a starting position for a conversation with your contractor and, on a job of any size, with an accountant.
What each input means
- Contractor’s price, labour and their materials
- The whole of their quote for the building work, excluding VAT. If their quote is VAT-inclusive at the standard rate, divide by 1.2 to get back to the net figure, or use the quote box in section 3 which does it for you.
- Fittings that stay standard rated
- Things inside the contractor’s price that HMRC does not treat as building materials, so the reduced rate cannot reach them. Carpets are the classic example, along with most freestanding appliances and some electrical goods. Ask the contractor to identify them on the quote: it is easier before the invoice than after.
- Materials you buy yourself
- Standard rated in every scenario. Included here so the total to pay is honest, and so you can see what moving some of it onto the contractor’s invoice would be worth.
- Professional fees
- Architect, structural engineer, surveyor, planning consultant, party wall surveyor. Standard rated as professional services, even on a job where the building work is reduced rated.
- Standard rate and reduced rate
- Yours to type. The tool never asserts a rate as a fact, because rates change and because the energy-saving materials position in particular has a scheduled end date. The work type suggests a rate when you change it, and you can overwrite it.
- A quote you have already been given
- The gross figure with standard-rate VAT already inside it. The calculator strips the VAT out and puts it back at the lower rate, which is the fastest way to see whether the conversation is worth having.
The mistakes that cost people the relief
1. Asking after the job has started
The two-year clock stops on the day the work begins. Start stripping out in March and ask about VAT in June and the question has already been answered, on the facts, by you. Raise it at quotation stage.
2. Letting somebody stay in the property while it is empty
A fortnight of occupation inside the two years is enough to break the test. Family staying between tenancies, a caretaker, a tenant serving out a notice period: all of it counts. If the property is close to the two-year mark, keep it empty and keep the evidence.
3. Assuming the contractor knows
Plenty of small builders have never charged anything but the standard rate and will say no because saying no is safe. They are not being difficult. They are the ones who answer to HMRC if it is wrong. Give them the evidence pack and the notice reference, and offer to let their accountant look at it.
4. Buying the expensive materials yourself
Windows, a heating system, kitchen carcasses. Bought by you, they are standard rated. Bought and installed by the contractor on a qualifying job, they are not. Price it both ways.
5. Treating a loft conversion as a change in dwellings
Adding rooms is not adding dwellings. The number of self-contained homes in the building has to change. This is the single most common misunderstanding of the conversion category.
6. Not getting it in writing
Get the agreed rate onto the quotation and the contract, not just into a phone call. If the contractor changes their mind at invoice stage, a written quotation is what the conversation is about.
Questions people ask about the 5% VAT rate
What is the 5% VAT rate on renovations?
UK VAT law sets a reduced rate for certain residential building work, and HMRC sets out the conditions in VAT Notice 708. The three that catch most homeowners are renovating a dwelling that has been empty for at least two years, converting a building so that it contains a different number of dwellings, and converting a non-residential building into a dwelling. Where the conditions are met the contractor charges the reduced rate on their services and on the materials they supply with those services, instead of the standard rate.
Do I qualify for 5% VAT on an empty property?
The published test is that the dwelling has not been lived in during the two years immediately before the work starts. Not mostly empty, not empty apart from a few weeks: nobody living there at all. It is a question of evidence rather than opinion, and the evidence has to satisfy the contractor, because it is the contractor who charges the rate and the contractor who answers to HMRC if the rate was wrong.
How much does the reduced rate actually save?
Fifteen pence in the pound on the qualifying part of the work, while the rates stand at 20% and 5%. On £80,000 of qualifying work that is £12,000. On the figures this calculator opens with, £58,000 of qualifying work saves £8,700, which is more than most people’s entire kitchen budget. It is the largest single saving available on a renovation and it is almost never claimed by accident.
Who claims the reduced rate, me or the builder?
The builder. This is the part almost every homeowner gets wrong. You are not reclaiming VAT and there is no form for you to send anywhere. The contractor decides what rate to charge on their own invoice, and they carry the risk if HMRC later disagrees. Your job is to raise it before the contract is signed and to hand over evidence good enough that saying yes is easy.
What counts as evidence that a property has been empty for two years?
Council tax records are the strongest single document, and many councils have an empty property officer who will write a letter confirming the period. Beyond that: electoral roll searches, utility bills showing no consumption or a disconnection, the letting or sale history, and a written statement from the previous owner or an executor. Give the contractor copies and let them keep them on file. One document rarely settles it; three usually do.
Does the reduced rate cover materials as well as labour?
It covers the building materials the contractor supplies as part of their own work. It does not cover everything that arrives in a van. Items HMRC does not treat as building materials, such as carpets and most freestanding appliances, stay at the standard rate even on a job that otherwise qualifies. That is what the fittings field in the calculator is for.
What if I buy the materials myself?
Then you pay the standard rate on them and there is nothing to be done about it. The reduced rate attaches to a supply of services with materials, not to a trip to a builders merchant. On a qualifying job this is a genuine reason to let the contractor buy more of the materials, and it is worth pricing both ways before deciding.
Does converting a house into flats qualify?
A conversion that changes the number of dwellings in a building is one of the reduced-rate categories, and it works in both directions: one house into three flats, or three flats back into one house. The number before and the number after have to be different, the result has to be used as a dwelling, and the new dwellings normally have to be self-contained with no planning restriction on their separate use or disposal. Get the planning permission and the plans in front of the contractor early.
What about a property empty for ten years or more?
The contractor’s services are still at the reduced rate rather than zero, but a very long empty period can open other doors, including the DIY housebuilders scheme in some circumstances. It is a narrow area with real money in it, so if your property has been empty that long it is worth twenty minutes with an accountant before the first invoice is raised rather than after.
Are energy-saving materials 5% or 0%?
Neither, reliably, because this is the rule that has moved most often. Installations of qualifying energy-saving materials in residential property have been zero rated in Great Britain under a time-limited relief, with the reduced rate scheduled to return afterwards, and Northern Ireland has its own history here. Rather than hard-code a rate that expires, this calculator lets you type it. Check the current position on the HMRC notice for energy-saving materials, or ask the installer what they are charging and why.
What if my builder has already charged me 20%?
Ask them to look at it again and, if they agree, to issue a credit note and a corrected invoice. They can normally adjust their own VAT position afterwards. What you cannot do is reclaim it yourself as a private individual, which is why raising it before the job starts is worth so much more than raising it at the end. If they will not move, that is a commercial conversation, and on a large job it is worth an accountant’s letter.
Is this tax advice?
No. It is an indicator and an arithmetic tool. The conditions in VAT Notice 708 have detail and exceptions this page does not attempt to reproduce, the rates change, and the decision belongs to your contractor and their accountant. Use the output to start the conversation, not to end it.
Is anything I type saved or uploaded?
No. The whole calculation runs in your browser. Nothing is uploaded, stored or logged, and there is no account. Close the tab and the numbers are gone, which is why there is a start over button and no save button.
The rate is one decision. The budget is two hundred.
This page answers one question and forgets it when you close the tab. That is deliberate, and it stays free. What it cannot do is carry two VAT rates through a live renovation budget, which is exactly where the saving gets lost again. The Home Renovation Budget Tracker (€13, Excel, Google Sheets or LibreOffice) tracks budget against actual by room and by trade, keeps every invoice with its VAT separated, revises the budget line when a change order is approved, and turns the contingency meter amber at 25% remaining. One payment, no subscription, no account.
See what is in the tracker