Domestic vs commercial work: what changes for a UK trade

↑ Part of the Getting Paid series · Getting paid on time

The same rewire can be two different jobs in law. Done for a homeowner, it sits under consumer law: the customer has protections you have to respect, and the payment rules that protect you are mostly the ones you write yourself. Done for a business, consumer law falls away, the Construction Act and the late-payment rules come in, and the VAT and CIS can change too. The work is identical. The paperwork, and what you can rely on when you are not paid, is not.

This page sits under our guide to getting paid on time. It sets the differences side by side, with a link to the detail on each.

Part 1Who counts as domestic

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For most of what follows, "domestic" means the customer is a person having work done for themselves, not for a business: a homeowner on their own house, usually. "Commercial" means the customer is a business, a landlord running a business, a developer, or a main contractor you are working under.

The edge cases matter. A landlord having a rental flat repaired is usually acting as a business. A homeowner building a house to live in is still a homeowner. If you are not sure which you are dealing with, ask, and write the answer on the quote.

Part 2Cancellation

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• Domestic: a contract agreed at the customer's home, or remotely by phone, email, text or an online acceptance link, usually carries a right to cancel within 14 days, and you must give them written notice of it. Start early only at their written request. See the 14-day right to cancel.
• Commercial: no statutory cooling-off. Cancellation is whatever the contract says.

Part 3Getting paid

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• Domestic: the Construction Act does not apply to work on a home the customer lives in or will live in, so there is no statutory right to stage payments and no statutory right to suspend work. Statutory late-payment interest does not apply either. Everything that protects your cash flow has to be in your own terms, agreed before the work: stage payments, a due date, an interest clause, and a line that work pauses if a stage goes unpaid.
• Commercial: the Construction Act gives a right to instalments on work expected to last 45 days or more, a payment-notice process, and a right to suspend work for non-payment after notice. On top, statutory late payment interest of 8% above the Bank of England base rate applies to an overdue invoice, plus fixed compensation, unless your contract sets its own rate.

Part 4VAT

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• Domestic: if you are VAT registered, you charge VAT in the ordinary way, and the price a homeowner sees should include it. The domestic reverse charge never applies to a homeowner, however big the job.
• Commercial: for most VAT-registered construction work for another VAT- and CIS-registered business that is not the end user, the domestic reverse charge applies: you invoice without charging the VAT, and the customer accounts for it.

The rate itself, 20%, 5% or zero, depends on the work, not the customer. Our guide to VAT rates on building work covers which applies.

Part 5CIS

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• Domestic: a homeowner having work done on their own home is not a contractor under the Construction Industry Scheme, so nothing is deducted from what they pay you. If you pay a subbie on the same job, you are the contractor for that payment and CIS applies to it.
• Commercial: a main contractor, or a business that counts as a contractor (and it is the one who should check that its subbies really are self-employed), deducts CIS from your labour before paying you, at 20% if you are registered and verified. Show labour and materials separately on every invoice. See CIS for subcontractors.

Part 6Retention and contract terms

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• Domestic: retention is unusual, and your own quote and terms are normally the whole contract. A good written quote covers it.
• Commercial: expect the customer's own terms, a standard-form contract, and retention held from each payment. Read the payment and retention clauses before you sign, because they decide when your money arrives.

Common questionsDomestic vs commercial: quick FAQ

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Does the Construction Act apply to domestic work?

Not to work on a home the customer lives in or intends to live in. On those jobs your payment rights come from your own written terms.

Can I charge late-payment interest to a homeowner?

Not under the late-payment law, which applies only between businesses. Put an interest clause in the terms they agree before the work starts. Without one you can still ask for interest, usually at 8%, if you have to make a court claim, but a rate agreed up front is far easier to rely on.

Does the reverse charge apply to homeowners?

No. A homeowner is the end user, so you charge VAT normally if you are registered, and the price they see should include it.

Is a landlord a domestic or commercial customer?

A landlord having work done on a property they let is usually acting as a business. Ask, and record the answer on the quote, because it decides which rules apply.

Does CIS apply on domestic jobs?

Not to what a homeowner pays you. A homeowner is not a contractor under the scheme, so they pay you in full. It still applies further down the chain: if you work under a builder on a homeowner's job, the builder deducts CIS from you, and if you pay a subbie on a domestic job, you are the contractor and you deduct it from them.

This guide is general information for UK tradespeople, current to the best of our knowledge in 2026, and is not tax, accounting or legal advice. Rates, thresholds and how they apply to you change, so confirm your position with HMRC, a qualified accountant or a solicitor before relying on it. TradeDraft accepts no liability for decisions made on the basis of this guide. Questions: hello@tradedraft.co.uk.