The short answer
Compare the actual total payable for the same scope. Add applicable VAT only where a quote excludes it and the supplier is entitled to charge it. Do not automatically add 20% to a non-VAT-registered builder’s final quote — they are not charging you VAT, so there is nothing to add.
If a quote does not say which it is, ask before you compare anything — the clarification email template includes a question for exactly that, and the free Builder Quote Checklist has a place to record each builder’s answer.
Who can charge VAT, and at what rate
Only VAT-registered businesses can charge VAT, as GOV.UK sets out in its guidance on charging and reclaiming VAT. Where standard-rated work is supplied by a VAT-registered contractor, most building work on houses and flats is standard-rated at 20%, though there are exceptions and conditions — GOV.UK explains them in its VAT for builders guidance. Do not assume any relief applies to your project; that depends on the work, the property and the supplier. If a VAT number is quoted and you want to confirm it and the registered business details, you can check a UK VAT number. Registration status tells you about size and tax obligations — it is not proof of quality or competence.
An illustrative worked example
These figures are made up to show the arithmetic. They are not current market prices, and they assume identical scope with no allowances or exclusions. All amounts are in pounds sterling.
- Builder A: £25,000 excluding VAT, plus £5,000 VAT at 20% — total payable £30,000.
- Builder B: not VAT registered, final quoted price £28,500, no VAT added — total payable £28,500.
- Builder C: £29,400 already including 20% VAT (net £24,500 plus £4,900 VAT) — total payable £29,400.
On these assumptions B is £1,500 below A. B is not “automatically 20% cheaper”, and B is not necessarily better value either. The common mistakes are adding VAT to a price that already includes it, and adding VAT to a non-registered builder’s figure.
Now adjust for scope — separately
VAT is only half the job. Say B excludes £2,000 of agreed work, priced as a final amount, that A includes. Comparing like for like, B’s figure becomes £30,500 — above A, even though B looked cheaper a moment ago. That is why a VAT-only comparison is not enough. Confirm any real added work, its price and its VAT treatment in writing rather than assuming either. The same logic runs through comparing builder quotes properly and understanding provisional sums.
What to record for every quote
- Quote reference and date, so you know which version you are comparing
- The builder’s statement about whether they are VAT registered
- Net, VAT and gross figures where applicable
- Allowances and provisional sums, flagged as estimates
- Anything you are buying yourself
- Exclusions and who is responsible for them
Leave anything you do not know marked “to confirm”. A guessed number quietly becomes a decision later.
A few sensible cautions
A non-registered builder’s price still reflects what their own materials cost them — it is not “tax-free materials”, and their supplier prices are their business, not a discount passed to you. On a long project it is fair to ask how a change in the builder’s VAT status would be handled, while recognising that neither side has an automatic right to change an agreed price. Tax treatment and contract wording are outside homeowner guidance: take those to HMRC or a suitably qualified adviser.
Short questions homeowners ask
Should I choose a VAT-registered builder? Choose on scope, evidence and clarity. Compare totals payable, then decide.
My quote says “plus VAT”. What do I budget? The net figure plus the VAT that applies to it — and ask for the gross total in writing so there is no ambiguity.
Can I just add 20% to every quote to be safe? No. It overstates a non-registered builder’s price and double-counts a VAT-inclusive one.
A short message is usually all it takes: “Could you confirm whether you are VAT registered, and give me the total payable including any VAT that applies to this quote?”
Use this on your actual project
The free Builder Quote Checklist gives you a short printable pack to sanity-check any UK builder quote. The Homeowner Quote Checker Pack goes further with the exact ground covered in this article.
The Builder's Brief UK provides practical homeowner guidance based on real trade experience. It is not legal, financial, architectural, structural engineering, planning or building-control advice, and is not a replacement for project-specific guidance from suitably qualified professionals.