Smart Home VAT Guide - New Builds and Renovations

9 Nov

Building a Smarter Home – and Paying Less VAT

When you’re planning a smart home or security installation, the cost can vary widely depending on your specification, technology, and scale.

But one factor that’s often overlooked — and can make a major difference to your budget — is VAT.

Under HMRC VAT Notice 708 (Building and Construction), certain types of projects and installations qualify for zero-rated (0%) or reduced-rated (5%) VAT. That means the same high-end lighting control, smart home system, or integrated security installation could cost you thousands less when structured correctly.

At Cabled & Co, we help clients understand how these rules apply to their specific build — ensuring systems are installed compliantly, efficiently, and with the correct VAT treatment.

New Builds – When You Can Pay 0% VAT

If you’re building a brand-new home or developing new dwellings, you may be eligible for zero-rated VAT on both the construction and qualifying installations.

According to VAT Notice 708, Section 3, the 0% rate applies when:

The work relates to the construction of a new dwelling that is designed as a self-contained house or flat
The property is capable of being used independently (not an extension or annexe)
The works are performed in the course of construction

In practical terms:

If your smart home wiring, lighting control, security, or audio-visual systems are installed while the property is being built — as part of the main construction — they can qualify for the 0% rate.

However, any equipment or work added after completion (such as retrofits or upgrades) will normally revert to the standard 20% rate.

Examples of qualifying smart home equipment for new builds

Lighting circuits, keypads, and control processors installed with the main electrical wiring
Smart home controllers (e.g. Control4 or Lutron processors) integrated into the central system
Security systems such as intruder alarms, CCTV, and intercoms wired into the structure
Infrastructure like Cat6 cabling, AV distribution, and network racks
Fixed in-ceiling or in-wall speakers installed during construction

Why timing matters

To qualify, the systems must be integrated — physically fixed and functionally necessary — as part of the build.

As VAT Notice 708 states, “Work is zero-rated when it is carried out in the course of construction of a new dwelling.”

By working with Cabled & Co from the start of your project, we ensure your smart systems are planned, documented, and installed in compliance — helping you benefit from full 0% VAT eligibility.

Renovations – When You Can Pay 5% VAT

If you’re upgrading or converting an existing property, VAT relief may still apply — this time at a reduced rate of 5%.

Under VAT Notice 708, the 5% rate applies when:

You’re converting a non-residential building (such as a barn or office) into a dwelling
You’re converting a single dwelling into multiple dwellings, or vice versa
You’re renovating a property that has been empty for two years or more
You’re working on a building that’s changing the number of residential units

When these criteria are met, labour and certain materials supplied together by the contractor can be charged at the 5% rate — including your smart home infrastructure.

Examples of qualifying smart home and security equipment for renovations

New smart lighting systems installed as part of a qualifying refurbishment
Security and CCTV systems rewired and installed during eligible conversion work
Smart heating, shading, or control equipment installed as part of the building fabric
Integrated audio or media systems connected into newly built walls or ceilings

Note that standalone equipment (like TVs, portable speakers, or plug-in devices) does not qualify — VAT Notice 708 clarifies that supplies must form part of the building work itself.

Documentation matters

To apply the reduced rate, you’ll need supporting evidence such as:

Proof of vacancy (for empty homes) — e.g. council tax records
Planning approval (for conversions or multiple-dwelling changes)
Contractor invoices showing the supply of materials and labour together

At Cabled & Co, we review this documentation as part of our quoting process and help ensure that eligible smart home work is included within the reduced-rate supply, so you don’t pay more VAT than necessary.

How Cabled & Co Ensure You’re Fully Compliant — and Fully Informed

Navigating VAT rules like those in HMRC’s VAT Notice 708 can be complex. The difference between 20% and 0% VAT can represent thousands of pounds in potential savings on a full-home automation project — but only if the systems are designed and installed correctly.

At Cabled & Co, we don’t just install premium smart home and security systems — we structure your project to maximise efficiency and compliance.

Here’s how we do it:

Early Consultation: We engage at design stage to confirm whether your project qualifies for 0% or 5% VAT, ensuring systems are integrated into the construction phase.
Technical Design: We create structured wiring plans that make smart lighting, security, and networking part of the property’s core fabric — not afterthoughts.
VAT Documentation: We assist your builder, architect, or main contractor with the correct VAT treatment documentation under Notice 708.
Product Guidance: We advise which equipment qualifies as “integral” (e.g. fixed, built-in systems) versus items that would remain standard-rated.
Peace of Mind: You get cutting-edge smart home technology — lighting, heating, entertainment, and security — installed the right way, with the right tax structure.

Ready to Plan Your Smart Home Project the Smart Way?

Whether you’re building a new home or renovating an existing one, understanding VAT eligibility can make a big difference to your total project cost.

Cabled & Co combine industry-leading expertise in smart home design with an in-depth understanding of HMRC’s VAT frameworks, ensuring you save where you can and stay fully compliant.

✅ 0% VAT for new builds

✅ 5% VAT for eligible renovations

✅ 20% VAT only where necessary

Get a quote or consultation:

👉 Book a free project consultation

👉 E xplore Smart Lighting Solutions

👉 Contact Cabled & Co