Building your own new-build home can be a really exciting project. Not only can you make your property exactly how you want it, the extra good news is you could also claim back some of the VAT costs. Here we look at how it all works.
Making an old property useable again (as long as it hasn’t been lived in for 10 years or more)
Converting a non-residential building into a property that will be lived in
The important thing is that your project aims to create a new, habitable property in its own right. This means buildings like loft conversions, annexes and extensions aren’t included.
Bear in mind too that some planning stipulations may make your project ineligible for a VAT reclaim, especially if there are restrictions on use or occupancy. The point is that the finished result must be a home for yourself and/or your family, and HMRC will likely want to see evidence of this.
How do I submit my claim?
Usually, VAT claims are made by VAT-registered businesses by sending a VAT return. However, in this scenario you’ll need to complete either:
Form 431NB to claim a VAT refund on a new build
Form 431C to claim for a conversion
You’ll only be able to claim the refund once, and you must make sure you submit your claim within 3 months of the building works being completed.
HMRC will usually write to you within 6 weeks with information about when the claim will be paid if you’re successful.
What will I need to submit with my VAT claim?
You’ll need to submit evidence which supports your VAT claim for your new-build property, and these should be the original documents. They should also be addressed to you, so include an explanation for any that aren’t.
Detailed professional plans
Valid planning permission
Evidence that the new build is finished. Usually this will be a completion certificate, valuation office listing letter, or habitation certificate.
You will need to submit your VAT claim to HMRC within three months of getting your completion certificate.
Comprehensive VAT return service
From only £40.00 per month
What kind of building projects can I reclaim the VAT on?
Usually you can reclaim VAT on:
New builds. As mentioned though, the finished new build must be for yourself and/or your family to live in, either permanently or as a holiday home. If an existing building is already on the site, it needs to be demolished to ground level.
Conversions that transform a non-residential building into a residential one. For example, a barn or church conversion, or converting a business premises.
Renovations where an old building that hasn’t been a residential home for at least 10 years is being made habitable again.
Garages that are being regenerated for use once the new build property is finished (these must also have the right planning permission).
Certain landscaping works if you’re building a holiday home for yourself and your family to use. Again, make sure you have the right planning permission in place, but you may be able to reclaim VAT on things like shrubs and turf, fences, garden walls and paving.
Are there any new build projects where I can’t claim back VAT?
There are certain projects where you can’t claim VAT, including:
Dwellings that aren’t independent in their own right
Properties that are being built for business purposes, for example a buy-to-let or holiday rental that you and your family aren’t going to use
The refurbishing of an existing home (unless it’s been unoccupied for more than 10 years)
Separate buildings like swimming pool or gym buildings, sheds, or garden stores
How much VAT can I claim back on my self-build?
As a self-builder, it’s easy to get carried away and not really notice what you’re being charged for VAT, but it’s really important to keep track and make sure it’s correct, otherwise HMRC will be unlikely to refund it.
Materials and labour costs that are supplied for your new self-build project should be subject to the current 20% standard rate of VAT. However, some energy-savings products (for example air source heat pumps and solar panels) only attract a 5% rate.
If you are converting a non-residential property into a home, or taking a building that hasn’t been lived in for more than 10 years and making it habitable again, you’ll be covered by another scheme called VAT Notice 431C. It basically means the way you claim back VAT against labour costs is slightly different if you’re carrying out a conversion compared to if you’re building from scratch.
Your builder will charge you 5% VAT on supply-and-fit or labour-only contracts. Once the project is finished, this can then be reclaimed by you in addition to the 20% on materials.
Always make sure you have all receipts and invoices to hand as evidence! It’s also worth noting that some costs might be zero-rated for VAT.
Which materials can I reclaim VAT on?
You can generally claim back VAT on the purchase of normal kinds of things you’d expect to find in a home, including bricks, sand, concrete, timber, roofing, paint, windows, doors, gutters, and other construction materials. On top of that, you can also reclaim VAT on:
Electrical and plumbing materials
Fittings like wall and floor tiles, TV aerials, light fittings, extractor fans, wooden floor systems, door furniture, boilers, fireplaces and fires, linoleum, fixed towel rails, sewage treatment plants, solar panels etc
Delivery charges that are added to invoices for materials
Swimming pools and saunas that are inside or attached to the new building
What materials can I not claim back VAT on?
Unfortunately, there are certain materials that can’t be included in a VAT reclaim, such as:
Equipment hire, including excavator hire, scaffolding, WC hire, etc
Bedroom furniture and bathroom furniture, including beds, free-standing units and vanity units
Delivery costs where the courier has invoiced them separately
Kitchen appliances, like ovens, hobs, washing machines and dishwashers
Consumables, including drills and other hand tools
Professional fees, which could include fees paid to project managers and architects
Don’t forget, VAT is a complex area so if anything is unclear make sure you get professional advice both before and during your project.
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About The Author
I'm an experienced and fully AAT and ACCA qualified accountant, who is enthusiastic about helping business owners succeed. I also love cooking and needlepoint (at different times!). Learn more about Beth.