VAT Calculator for Construction
The UK construction sector operates under unique VAT rules — including the Domestic Reverse Charge (DRC) and the Construction Industry Scheme (CIS). This guide explains how to calculate VAT correctly on every type of construction invoice.
Domestic Reverse Charge (DRC) Applies
Since March 2021, the DRC applies to most construction services under CIS. If you are a subcontractor supplying to a VAT-registered contractor, you do not charge VAT — the contractor accounts for it instead. Using our standard VAT calculator for DRC invoices will give incorrect results.
Common Construction VAT Benchmarks
When Standard 20% VAT Applies in Construction
Materials only supplies
Selling building materials to non-CIS clients is standard-rated at 20%.
End-consumer contracts
Work billed directly to homeowners (not VAT-registered businesses) uses standard 20% VAT.
Residential new build
New residential dwellings are typically zero-rated — no VAT on the construction service.
Commercial fit-outs
Office and retail refurbishments for non-DRC clients use the standard 20% rate.
CIS and VAT: Key Differences
The Construction Industry Scheme (CIS) governs tax deductions from subcontractor payments, while VAT is a separate obligation. Under DRC, the CIS contractor self-accounts for the VAT on their VAT return — the subcontractor's invoice should state: "Reverse Charge: Customer to pay VAT of £X directly to HMRC."
For verification of any specific contract amount, use our UK VAT Calculator to determine the gross equivalent, then confirm with your HMRC payment obligation guide if cashflow is an issue.
Calibrated to Finance Act 2026. Always verify DRC with your accountant.