VAT on Trade Quotes Explained in Plain English
A plain-English guide to VAT on quotes and invoices for home and garden services: when it applies, how to spot it, and what to ask before you accept.
VAT is one of the most common reasons two quotes look different. A price of £1,000 plus VAT is not the same as £1,000 including VAT, and the difference at the standard rate is several hundred pounds on a larger job. This guide gives a general explanation so you can ask the right questions. It is not tax advice, and rates and rules can change, so check gov.uk for the current position.
What VAT is
Value Added Tax is a tax added to many goods and services in the UK. Businesses that are registered for VAT charge it on their sales and pass it to HMRC, after deducting VAT they have paid on their own purchases.
Which providers charge it?
- VAT-registered businesses must charge VAT on their taxable supplies. Businesses have to register once their taxable turnover exceeds a threshold set by the government, and some choose to register voluntarily.
- Smaller providers below the threshold are not required to register and often do not charge VAT.
Because of this, a small sole trader may be quoting without VAT while a larger company next to them includes it. That does not necessarily make the sole trader cheaper in value terms, but it does change the sums you compare.
How to tell whether VAT is included
Read the quote and invoice. Look for:
- A VAT registration number, which appears on invoices from VAT-registered businesses.
- A line saying "VAT at 20%" or similar, with a net, VAT and gross total.
- The phrase "plus VAT" or "ex VAT" alongside the price.
- The phrase "inc. VAT" or "VAT included".
If it does not say, ask. "Is that price with VAT included, and are you VAT registered?" is a perfectly normal question.
Rates in general
There is a standard rate, a reduced rate and a zero rate, and which applies depends on the type of work and the property. Some energy-saving installations in homes and certain work on dwellings have historically had reduced or zero rates. Because the rules are technical and can change, do not assume. Ask the provider which rate they apply and why, and check gov.uk if the amount is significant.
Quoting before and after VAT
For comparing offers, put every quote on the same basis. If one is excluding VAT and another includes it, add VAT to the first at the rate that applies, so they are comparable. Our quote comparison guide has a table with a VAT row for exactly this.
VAT on materials and labour
Often both are subject to VAT, but a provider may itemise them separately. The overall effect is the same as VAT on the total. If materials are bought by you directly from a shop, the price you pay will already include whatever VAT applies. See who pays for materials.
Warning signs
Be careful if:
- A provider offers "a discount if we do it without VAT" or "cash and no VAT". VAT cannot simply be waived by agreement if the provider is VAT registered, and avoiding it may be unlawful. It can also leave you with no invoice and fewer options if something goes wrong.
- A provider quotes without VAT, then adds it at the end without having mentioned it.
- A provider gives a VAT number you cannot verify. You can check the validity of a UK VAT number through the government's service on gov.uk.
Getting a proper invoice
You should be able to get an invoice or receipt for work you have paid for. For VAT-registered businesses, this should show the VAT number, the VAT amount and the date. See getting a receipt and invoice. Keep it. It may matter for warranties, insurance claims or when you sell your home.
If you are a landlord or business
Whether you can reclaim VAT depends on your own tax position. That is beyond a general guide, so speak to an accountant or check gov.uk.
A worked example
Two quotes arrive for a garden room base. Provider A says £3,000 "all in" and is not VAT registered. Provider B says £2,600 plus VAT at the standard rate, which comes to £3,120. B looks cheaper until the VAT is added. If you had compared only the headlines you would have chosen the wrong way, and the gap is only £120, which could easily be explained by scope. The point is to compare like with like, not to assume that VAT is being added or hidden.
Questions to ask
- Are you VAT registered, and does this price include VAT?
- If VAT applies, which rate and why?
- Will the invoice show the VAT number, the VAT amount and the net amount?
- Is VAT charged on materials as well as labour?
- If the price changes, will you tell me before VAT is added?
Stage payments and VAT
If you are paying a deposit or stage payment, VAT may be due on those as well. Ask for each payment request to show the net amount, VAT and total, and keep each one. When the final bill arrives, the totals should add up to the figure you agreed.
Private customers and businesses
A private householder generally cannot reclaim VAT, so the full amount is the cost to you. A business customer or landlord may be in a different position. If that applies to you, check gov.uk or ask an accountant, and tell the provider so the invoice is made out correctly.
A word of caution
If someone insists that the price depends on you paying cash and not asking for an invoice, treat that as a red flag. Records protect both sides, especially if the work needs to be put right or you need evidence later.
Frequently asked questions
Do all tradespeople charge VAT?
No. Only VAT-registered businesses must charge it. Many small providers are below the threshold and do not.
Can I ask the provider to leave VAT off?
If they are VAT registered, they have to account for it. Be wary of any offer to avoid it in exchange for cash or no paperwork.
How do I check a VAT number?
The government provides an online service on gov.uk for checking whether a UK VAT number is valid and which business it belongs to.