Reclaiming the VAT on a New Build Property

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.

When can I reclaim the VAT on a new build property?

The DIY Housebuilders Scheme says you can reclaim VAT from HMRC if you are:

• Building a new house
• 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 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?

VAT claims are usually made by VAT-registered businesses by sending a VAT return, but in this scenario you can use the dedicated online service.

If you can’t use the online service, you can submit a paper form instead:

• 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 6 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 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 six months of getting your completion certificate.

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 which 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 which hasn’t been a residential home for at least 10 years is being made habitable again.
• Garages 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.

Can I claim back VAT on any new build project?

No, there are some exceptions so you won’t be able to claim back VAT on:

• Dwellings that aren’t independent in their own right
• Properties being built for business purposes, for example a buy-to-let or holiday rental 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 a garden office

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 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.

Always make sure you have all receipts and invoices to hand as evidence! It’s also worth noting 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 added to invoices for materials
• Swimming pools and saunas 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
• Carpets
• 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.

Need help with anything relating to VAT? Call our expert team on 020 3355 4047 or get an instant online quote. Check out our various guides and videos too.