VAT on Timber, Flooring, and Building Projects: What You Need to Know
VAT can be confusing when it comes to timber and building projects. Sometimes customers ask why we charge 20% VAT, other times they have heard about 5% VAT for renovations or even 0% VAT on new builds.
This guide explains the rules clearly and what applies in different situations.
1. Standard Timber Purchases (Supply Only)
If you are buying timber from us for flooring, cladding, lining boards, or any other building material on a supply-only basis, the VAT rate is:
- 20% VAT (standard rate).
Even if your project is a renovation or conversion, we must charge 20% VAT when we are only supplying materials. This is HMRC’s rule — the reduced rates only apply when materials are supplied and installed by a VAT-registered contractor.
2. Renovations and Conversions – The 5% VAT Rate
The reduced 5% VAT rate applies in certain cases, for example:
- Converting a non-residential property into a home.
- Renovating a dwelling that has been empty for more than 2 years.
However:
- The 5% rate can only be applied by a VAT-registered contractor who is carrying out the work (supply + install).
- We, as a sawmill/shop supplying only the timber, must always charge 20% VAT.
- The contractor then reclaims the 20% VAT they paid to us, and invoices the homeowner at 5% if the project qualifies.
Customers cannot reclaim the 15% difference themselves. The reduced rate flows through the contractor’s invoice, not the merchant’s supply.
3. New Builds – The 0% VAT RateText Here
For qualifying new-build homes, HMRC allows the construction services (labour + materials installed by a VAT-registered builder) to be zero-rated for VAT.
What this means in practice:
- If we supply timber to a contractor building a new house → we charge 20% VAT. The contractor reclaims this and invoices the homeowner at 0%.
- If we supply timber directly to a self-builder → we must also charge 20% VAT. The self-builder pays it upfront, and then claims it back from HMRC under the DIY Housebuilders VAT Refund Scheme once the build is complete.
In other words: we always charge 20% VAT. For new builds, either the contractor claims it back (if installed), or the self-builder claims it back (via HMRC).
4. Firewood, Logs, and Fuel Products – The 5% VAT Rate
Different rules apply to fuel:
Firewood, logs, pellets, and similar products are charged at the reduced 5% VAT rate if they are for domestic heating.
5. Summary Table
Situation | Who we sell to | VAT we charge | What happens next |
Timber supply only (any project) | Homeowner, contractor, merchant | 20% VAT | End customer pays 20%. No reduced rate applies. |
Renovation/conversion (2+ years empty, non-residential to residential) | Contractor | 20% VAT | Contractor reclaims VAT and invoices customer at 5% if work qualifies. |
Renovation/conversion | Homeowner direct | 20% VAT | Customer pays 20%. Cannot reclaim difference from HMRC. |
New build (contractor) | Contractor | 20% VAT | Contractor reclaims VAT, invoices customer at 0%. |
New build (self-builder) | Homeowner/self-builder | 20% VAT | Customer reclaims VAT from HMRC after completion via DIY scheme. |
Firewood/fuel | Any | 5% VAT | Reduced rate applies at point of sale. |
6. Key Takeaways for Customers
- We must always charge 20% VAT on timber supply-only sales (flooring, cladding, boards, etc.).
- The 5% reduced rate only applies when a VAT-registered contractor supplies and installs qualifying materials.
- The 0% rate on new builds applies only to the contractor’s invoice for full building services, or via the DIY reclaim scheme for self-builders.
- The only products we sell that are directly eligible for reduced VAT at point of sale are logs and fuelwood (5%).
7. Next Steps
- If you’re a homeowner renovating: expect 20% VAT from us on supply-only timber. If using a contractor, they may invoice you at 5% if your project qualifies.
- If you’re a self-builder: keep all your VAT invoices, and reclaim through HMRC at the end of your project.
- If you’re buying logs or fuelwood: you’ll benefit from the reduced 5% VAT automatically.
