This article explains how VAT is set up in Buildxact for UK accounts, how to change it for a single estimate, and how to change it on individual items.
Watch the video below to see this in action, or continue reading for step-by-step details.
This is general advice only. VAT depends on lots of things, including your business, the type of work, the property and your client, so there are many different scenarios. The examples in this article are for illustration only. If you're not sure which rate applies, get advice from an accountant or tax professional, or check HMRC's VAT guidance for builders.
Once you know which rates you need, our support team can help you set them up in Buildxact. We can't advise which rates apply to your work.
How VAT is set up in Buildxact
Go to My Business > Business Setup > Tax Rates. The screen is split into two halves:
Expenses (top half): the VAT on things you buy for a project, such as purchase orders and work orders.
Income (bottom half): the VAT you charge your client through estimates and variations (change orders). This isn't the business income you report at the end of the year.
Each half has a rate for each item type: Material, Labour, MatLab (material and labour), Equipment and Subcontractor. UK accounts are set to 20% for every item type in both halves by default.
Set your default VAT
These rates are the default for your account, so set them to match the type of work you do most often. You can change them for any estimate that's different.
Go to My Business > Business Setup > Tax Rates.
Click Edit.
Tick the rate you want for each item type. For example, if most of your work is zero-rated, tick 0% for every item type in the income half.
Click Save.
Leave the Exempt column as it is. It tells Buildxact which rate is the exempt option, so you don't need to change it. You also don't need to change the tax names, types or codes. Just the tick boxes.
Please don't delete any tax rates. It won't break anything, but it makes your setup harder to follow later.
Common UK VAT rates
The rates below are only a starting point, not a complete list. Whether a rate applies depends on the details of the job, so check with your accountant or HMRC if you're unsure.
20% standard rate: most building work.
5% reduced rate: can apply to some residential conversions and to renovating homes that have been empty for a long time.
0% zero rate: can apply to building new homes, some adaptations to the home of a disabled person (such as ramps or widening doorways), and installing some energy-saving materials. Only specific work qualifies, and for work for a disabled person your client usually needs to sign an eligibility declaration.
Zero-rated isn't the same as exempt. Both mean no VAT on your invoice, but they're treated differently. VAT-registered businesses doing zero-rated work can usually reclaim the VAT they pay on purchases. That generally isn't the case for exempt supplies. Your accountant can confirm which applies to your work.
VAT on expenses when your income is 0%
Even when you're doing zero-rated work, you'll still pay VAT on many of your purchases. Most people leave expenses at 20%, whatever the rate on income. That way the totals in Buildxact match the receipts you enter or scan.
You can set expenses to match income if you prefer. It's a personal choice.
Subcontractor invoices can differ. For example, subcontractors on some new builds can zero-rate their work, and under the construction domestic reverse charge, a subcontractor's invoice may show no VAT at all. Check that the VAT in Buildxact matches the invoice you received.
Change VAT for one estimate
Your account's default rates flow into every new estimate. If a project needs different rates, change them on that estimate.
Open the estimate and go to the Estimate Details tab.
In the Estimate Details section, find Tax Profile and click Customise.
Change the rates you need, for example set income to 0%, then click Save.
A message warns you that your tax rates are about to change. Confirm to continue.
This changes the VAT for this estimate only. If it's different from your account's default, (Adjusted) is added to the end of the tax profile name, so you can see at a glance which rates the estimate uses.
Why the warning? If you've already built the estimate, the new VAT is applied to every item, so your total will change.
Any categories and items you add after this use the estimate's new rates.
Change VAT on a single item
If an estimate uses 20% but one item has a different rate, you can change just that item.
Open the estimate and go to Costings.
Find the item and click its value in the VAT column.
Select the rate you need, for example 0%.
More general info on tax setup:
Need help? Reach out to our support team — we're here to help!