When planning a renovation, extension or new build, most homeowners focus on layouts, finishes and budgets. (And rightly so in our opinion!)
But one area that can dramatically affect the final cost — and often cause confusion — is VAT. So here is a quick breakdown of what you need to know about the subject.
Because kitchens and fitted furniture (Monkeywood projects) are often part of larger building works, VAT is a conversation we have regularly with clients, architects and main contractors.
And the reality is this: VAT in construction is rarely straightforward.
The Basics: 20%, 5% or 0%
In UK construction, work can fall into three VAT categories:
- 20% Standard Rate – Most home renovations and improvements
- 5% Reduced Rate – Certain qualifying renovations (such as long-term empty properties)
- 0% Zero Rating – New build dwellings and some qualifying conversions
The difference between 20% and 0% on a significant interior package is substantial — particularly on bespoke joinery.
Renovations & Extensions: Usually 20%
If you are extending your home or remodelling your kitchen, VAT is typically charged at 20%.
This includes:
- Kitchen replacements
- Utility rooms
- Fitted wardrobes
- Studies and media units
- Any other fitted furniture
- Structural alterations
For most period homes and family renovations we work on in the UK, this is the default position.
New Builds: A Very Different Picture
New residential builds are generally zero-rated for VAT.
This means qualifying construction work does not have VAT added. Importantly for our clients, bespoke fitted cabinetry that is designed, built, and installed as part of the construction process is usually treated as zero-rated too.
However, not everything qualifies.
For example:
- Freestanding furniture does not
- Freestanding appliances are standard rated
- Some supply-only items are treated differently
The detail matters — especially in high-spec homes where kitchens and fitted interiors form a significant part of the overall investment.
Conversions & Complex Projects
Projects involving barn conversions, commercial-to-residential schemes, or long-term empty properties can fall under different VAT rules.
Some qualify for zero rating.
Some qualify for 5%.
Some do not qualify at all.
The distinction depends on how the project is structured, how contracts are written, and whether the correct certification is in place.
This is why early coordination between client, contractor, designer and accountant is essential.
Why We Discuss VAT Early
At Monkeywood, we are cabinet makers — not tax advisers — but we understand how VAT interacts with bespoke joinery because it directly affects our clients’ budgets.
Discussing VAT treatment early allows us to:
- Structure quotations correctly
- Coordinate with main contractors
- Ensure compliance with HMRC requirements
- Avoid surprises at invoice stage
The worst position for any client is discovering a 20% uplift late in the process because assumptions have been made at the start.
A Practical Takeaway
If you are planning a project, ask:
- Is this renovation, conversion or new build?
- Does any part qualify for reduced or zero rating?
- Who is responsible for applying the correct VAT treatment?
- Is certification required?
Clear answers at the outset protect both budget and programme. Your architects should be able to help you with this.
Final Thoughts
VAT is not the most exciting part of a building project — but it can be one of the most financially significant.
Thoughtful planning, clear communication, and experienced contractors make all the difference.
If you are planning a renovation or new build and would like to discuss how bespoke kitchens and fitted interiors integrate into the wider build process, we are always happy to have an early conversation.
Tom (Founder & Director at Monkeywood)