Charging customers for materials: markup, VAT and recharges
Updated 11 October 2026 · 2026/27 tax year
Forgetting to charge for the parts you bought is one of the commonest ways tradespeople lose money. Here's how to bill for materials properly.
Add a markup
Many trades add 10% to 20% to materials, to cover the time spent buying and collecting them, the risk of returns and the cost of carrying stock. Whatever you choose, be consistent and quote it if you can.
Recharge or disbursement?
Usually you buy materials and they become part of your job: that's a recharge, it's your income, and the cost is your expense. A true disbursement is rare: you pay something purely as the customer's agent, such as a fee in their name, and it's passed on at cost and kept out of your income.
VAT on materials
- Not VAT registered: charge the price you paid plus any markup, with no VAT
- VAT registered: you reclaim the VAT you paid, then charge VAT on the whole price, materials included
- Construction work for a VAT-registered builder may fall under the reverse charge
With CIS
Show materials separately on the invoice. The contractor takes CIS off the labour only, not the materials.
Keep the receipts
Keep every receipt and link it to the job. It backs up your expense claim and lets you see what each job really made.
This guide is general information, not tax advice. Check HMRC's guidance or ask an accountant about your own situation.