Supplies of building materials

By Tolley

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

  • Supplies of building materials
  • Supplied over the counter
  • Goods incorporated by the builder
  • What are building materials?
  • Reclaiming input tax

This guidance note provides an overview of the VAT treatment of building materials supplied by contractors.

VCONST11000; De Voil Indirect Tax Service V4.242 (subscription sensitive); HMRC Notice 708 
Supplied over the counter

A retailer, builders merchant, etc will be required to charge VAT on any building materials supplied, unless the items themselves are eligible for VAT at either the reduced or zero rate (ie energy saving materials, protective boots / helmets or printed manuals, etc). There are also certain VAT reliefs available for goods supplied with certain building services to disabled persons or charities serving the needs of disabled persons.

Please see the Zero-rating ― protective helmets and boots, Zero-rated ― supplies of printed matter, Reduced VAT rate ― supplies of energy saving materials and Zero-rating ― supplies to disabled individuals guidance notes for more information on these reliefs, etc.

Goods incorporated by the builder

A business will need to determine the VAT treatment of the building or building services supplied. An overview of the current VAT treatment can be found in the Summary of the VAT liability of construction services guidance note.

VATA 1994, Sch 8, Group 5, item 4, Group 6, item 3; VCONST11100

The VAT treatment of any goods that are incorporated into the construction or reconstruction will follow the same VAT treatment as the main supply. Goods that are either not deemed to be building materials or are not supplied together with building services will always be liable to VAT at the relevant rate.

A supply of building materials to a person is zero-rated if:

  • the supplier makes a supply of zero-rated construction services under VATA 1994, Sch 8, Group 5, items 2 or 3 or Group 6, item 2

More on Construction and building services: