FMB: £876m of Scottish building work on hold as VAT stays put

Homeowners who want energy-saving work done have until 31 March 2027 to benefit from 0% VAT. Most other home improvements still carry 20% VAT, and that is built into our figures. The Federation of Master Builders (FMB) wants that changed. It also says a lack of trust in builders is holding back a large amount of work.

What FMB says

According to FMB, Federation of Master Builders, Scottish homeowners put off about £876 million of building work every year because they cannot find a builder they trust. That is Scotland's share of a UK-wide figure of £11.2 billion a year.

The figures come from research by FMB and the HomeOwners Alliance. It found that one in five homeowners had postponed work in the past five years because they could not find a trusted or good-quality builder.

On tax, FMB makes these points:

• VAT is set at Westminster, so the UK Budget applies directly to Scottish households.
• Domestic electricity has been VAT-free since 1 October.
• VAT stays at 20% on labour for general home improvement work.
• Some energy-efficiency installations are charged at 0%, but that relief is due to end in March.
• FMB wants the Chancellor to simplify and extend VAT relief beyond energy efficiency.
• Energy-efficiency work is often bundled with general upgrades. FMB says that leaves builders with a messy invoice trail when they have to split what is exempt from what is not.

FMB also wants funding aimed at helping employers recruit and train apprentices. It expects more detail from the Scottish Budget in December.

What it means for your costs

We have not changed any figures because of this story. Our estimates already include 20% VAT, except where 0% applies. Here is how that works for the projects most affected.

Energy-saving installations (0% VAT until 31 March 2027)

Heat pumps, insulation, solar panels and batteries currently qualify for 0% VAT on installation. After 31 March 2027 the standard rate is due to apply again, unless the rules change. If you have been weighing up one of these jobs, the deadline matters.

• Air source heat pump: typically £12,900, with mid-range quotes running £10,100 – £16,800. See our [heat pump cost guide](Air source heat pump).
• Solar panels: typically £12,600, or £12,600 with a 5 kWh battery. Our [solar cost guide](Solar panels) has the full breakdown.
• External wall insulation: typically £26,000, with a range of £20,300 – £33,800. See the [wall insulation guide](External wall insulation).

Grants are separate from VAT. The Boiler Upgrade Scheme takes £7,500 off an air source or ground source heat pump in England and Wales, and the installer must be MCS certified. In Scotland, Home Energy Scotland offers a grant of up to £7,500, plus an optional £7,500 interest-free loan.

The government's Warm Homes Plan, published in January 2026, commits £15bn to 2030. That includes grants for low-income households and low- or zero-interest loans, which are being phased in.

Everything else (20% VAT)

For general improvements, nothing changes today. A bathroom, kitchen or new flooring all carry 20% VAT, and it is already in our numbers:

• Bathroom renovation: typically £7,000. See the [bathroom cost guide](Bathroom renovation).
• New kitchen: typically £7,800. See the [kitchen cost guide](New kitchen).

If the government extends VAT relief to more types of work, we will update the live model. The figures on this page will then update too.

Mixed jobs

FMB's point about invoices is worth remembering if you combine jobs. If you are having a heat pump fitted alongside a bathroom refit, ask your builder to itemise the quote so the energy-saving element is clearly separated from general work. A clear invoice also makes it easier to see which parts of the bill attract 0% VAT and which attract 20%.

Finding a builder you can trust

FMB's research suggests that trust is a bigger obstacle than price for many households. Some practical steps:

• Get at least three written quotes, itemised by labour and materials.
• Check that the right registrations are in place. For heat pump grants the installer must be MCS certified. Gas work must be done by a Gas Safe registered engineer.
• Be wary of a quote that is far below the others. Ask what has been left out.
• Compare each quote with a realistic range for your job.

That last step is where we can help. We calculate our figures from labour hours multiplied by local rates, plus materials, then check them against market prices and real quotes. Our "is my quote fair" tool lets you compare a quote against that range before you commit.

Our view

For energy-saving work, the 31 March 2027 date is the one to plan around, so start getting quotes early. Installers' diaries tend to fill up before a deadline. For everything else, expect 20% VAT to stay in your budget until the government says otherwise.