VAT on construction services

[Taf]

I understand that VAT on construction services is to be charged at standard rate except in the course of new dwellings where it is zero rated give or take a couple of quirky exceptions e.g. renovations and alterations.

Can you tell me whether, if it is just a labour only job i.e. the customer has purhchased all the materials themselves, whether VAT should be charged on the labour assuming it is not a new build or is this excluded from VAT.

On a similar theme, should a contractor charge VAT on both labour and materials in their invoice or is it just on the materials part purchased for the project.

Thanks in advance

[vatexpert]

In general terms it is the services that are zero-rated in respect of the construction of new dwellings, approved alterations to listed buildings etc and only the supply of materials incorporated as part of the services become zero-rated. Materials supplied without qualifying services are standard-rated.

On a labour only job where the customer has purchased the materials, VAT would be payable by the customer on the materials. The VAT liability of the labour could be zero-rated, as described above, reduced-rated (5%) as, for example, some residential conversions, or standard-rated.

Joe Wilkins
www.vatexpert.net

[Taf]

Thank you for your reply. Sorry to sound dim, but your first paragraph was a bit too confusing, because you said sometihng like only the supply of materials incorporated as part of the services becomes zero rated .(What does that phrase mean?)

Can you please give me an example. e.g. if the contractor works in a new build and purhcases a 'dishwasher' say, for fitting, then is this to be invoiced to the customer zero rated.

How would it differ if the house was old.

How would it differ if the customer bought the dishwaasher himself.

Thx.

[ivorproblem]

Electrical items such as dishwashers/cookers/washing machines are not zero rated for new houses whether they are fitted or freestanding , that is the house buyer cant get the vat back on them. So whilst
a plumber or electrician would not charge vat on his labour for fixing / plumbing them in but he would have to charge vat on the items themselves. Electrical appliances are some of the few things in a new house you cant get vat back on . Therefore there is no difference whether you supply the dishwasher or the customer - its not a zero rated `material`.
if you have any more queries post them here i`ll keep an eye out !