Buildings and construction ― building materials

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

Buildings and construction ― building materials
What are building materials?
When are goods ‘ordinarily incorporated’ for these purposes?
Prefabricated furniture
Electrical or gas appliances
Carpets and carpeting materials
What is the VAT liability of building materials?
When will building materials be standard-rated?
When will building materials be reduced-rated?
When will building materials be zero-rated?

More...

What is the VAT liability if goods are not building materials?
When are building materials ‘incorporated’ into a building or its site?
When are goods ‘ordinarily incorporated’ in a building?
When is VAT recovery on goods incorporated into a building blocked?
When is there going to be a zero-rated grant of a major interest in the building?
When are goods incorporated into the building or its site?
Would the service of incorporating the goods be zero-rated?
When are the goods building materials?
How are the goods treated if the block applies?
Can the block apply if the goods are not incorporated into a building?
Does the block apply to show homes?
Practical points ― building materials and the input tax block

This guidance note describes:

•
the VAT treatment of supplies of building materials
•
when input tax on certain goods incorporated into buildings is ‘blocked’ and cannot be recovered

For an overview of the liability of supplies relating to construction, conversion and renovation more broadly, see the Overview ― construction, conversion and renovation guidance note.

For input tax generally, see the What is input tax? guidance note.

For in-depth discussion of the legislation and case law in relation to building materials, see De Voil Indirect Tax Service V4.242, and for the input tax block, see De Voil Indirect Tax Service V3.444.

What are building materials?

The following bullet points set out the conditions that goods have to meet in order to be classed as ‘building materials’ for VAT purposes. Goods will not be building materials unless they meet all of the conditions:

•
the goods must be ‘ordinarily incorporated’ into the kind of building being constructed, converted, renovated, etc
•
the goods must not be finished or prefabricated furniture or materials that will be used to produce fitted furniture (except kitchen furniture)
•
the goods must not be electrical or gas appliances (with certain exceptions)
•
the goods must not be carpets or carpeting materials

VATA 1994, Sch 8, Group 5, Notes 22, 23; VATA 1994, Sch 7A, Group 7, Note 6, Group 6, Note 12; Notice 708, section 13; VCONST13500

When are goods ‘ordinarily incorporated’ for these purposes?

When goods are seen as ‘ordinarily incorporated’ into a building for these purposes is described later in this guidance note.

Prefabricated furniture

Finished or prefabricated furniture (eg bathroom cabinets) and the materials that will be used to produce fitted furniture do not count as building materials. However, there is an exception for fitted kitchen furniture (and the materials which will be used to construct it). Fitted kitchen furniture is considered to be building materials.

HMRC’s views on a number of commonly seen articles are set out in Notice 708, section 13 and VCONST13600.

Electrical or gas appliances

Electrical and gas appliances are not

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