Flat Rate Scheme · trade
Labour-only construction: 14.5% flat rate
Policy state · verified
Flat Rate Scheme · Labour-only construction: 14.5%
VAT Notice 733 §4.4 (trade-sector table) · Last verified 13 Jun 2026
gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733What HMRC means by this trade
Construction services where the cost of materials supplied is less than 10% of turnover (labour-only).
The flat rate for the HMRC sector “Labour-only building or construction services” is 14.5%. You apply that percentage to your gross (VAT-inclusive) turnover to work out what you pay HMRC. VAT Notice 733
FRS vs Standard at sample turnovers
The figures below assume 4% recoverable input VAT under the standard method — adjust for your own cost base in the advisor. Positive means the Flat Rate Scheme costs you less than the standard method.
| Net turnover | FRS VAT due | Standard VAT due | FRS saving |
|---|---|---|---|
| £30,000 | £5,220 | £4,800 | −£420 |
| £50,000 | £8,700 | £8,000 | −£700 |
| £80,000 | £13,920 | £12,800 | −£1,120 |
| £120,000 | £20,880 | £19,200 | −£1,680 |
| £150,000 | £26,100 | £24,000 | −£2,100 |
Watch the limited-cost test
If your goods cost less than 2% of your turnover (or less than £1,000 a year), you must use the 16.5% limited-cost rate instead of the 14.5% sector rate — even though your trade is labour-only construction. Service businesses that buy little in the way of goods are often caught by this. The 1% first-year discount still applies on top.
Flat Rate Scheme advisor · 58 HMRC trade sectors
Your FRS percentage and the FRS-vs-Standard maths
IT & professional services · 11
Trades & construction · 10
Creative & media · 6
Beauty & personal care · 2
Retail & food · 7
Hospitality & leisure · 6
Transport & agriculture · 5
Other services · 11
Trades & construction
Labour-only construction
Construction services where the cost of materials supplied is less than 10% of turnover (labour-only).
HMRC label: Labour-only building or construction services
- FRS VAT due (14.5% × gross £72,000)
- £10,440
- Standard VAT due (20% output − 4% input)
- £9,600
- Estimated annual extra cost on FRS
- −£840
Input VAT is an estimate you control above — your actual recoverable input VAT depends on your specific VAT-bearing costs. The Flat Rate Scheme does not let you reclaim input VAT (except on certain capital assets over £2,000).
| Net turnover | FRS due | Standard due |
|---|---|---|
| £30,000 | £5,220 | £4,800 |
| £50,000 | £8,700 | £8,000 |
| £80,000 | £13,920 | £12,800 |
| £120,000 | £20,880 | £19,200 |
| £150,000 | £26,100 | £24,000 |
Policy state · verified
Flat Rate Scheme percentages: Labour-only construction · 14.5%
VAT Notice 733 §4.4 (trade-sector table) · Last verified 13 Jun 2026
gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733Other trades
Not quite your trade? Browse all 58 HMRC sectors, or use the search in the advisor above.