Some construction work is reduced-rated at 5% VAT — for example certain residential conversions and renovations. Where such work falls under the CIS domestic reverse charge, the invoice still charges no VAT, but it states the customer must account for VAT at the 5% reduced rate rather than 20%.
Key points
- Some construction work is reduced-rated at 5%.
- Under the reverse charge, the invoice states the customer accounts for VAT at 5%.
- Apex Billing supports both the 20% and 5% reverse charge.
Reduced-rate construction work
Certain qualifying construction services are reduced-rated at 5% instead of the standard 20% — such as some conversions of properties into a different number of dwellings, and renovations of homes empty for a qualifying period. Whether a specific job qualifies depends on the detailed conditions.
Reduced rate + reverse charge together
When reduced-rated work is also within the reverse charge, the two combine: no VAT is charged on the invoice, and the wording states the customer accounts for the VAT at 5%. Apex Billing supports this as a distinct treatment (RC5) alongside the 20% reverse charge.
This is general information, not tax advice — confirm your own position with your accountant or HMRC (see VAT Notice 700/62 on self-billing).