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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.
The DIY Housebuilders Scheme says you can reclaim VAT from HMRC if you are:
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.
Usually, VAT claims are made by VAT-registered businesses by sending a VAT return. However, in this scenario you’ll need to complete either:
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.
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.
You will need to submit your VAT claim to HMRC within three months of getting your completion certificate.
Usually you can reclaim VAT on:
There are certain projects where you can’t claim VAT, including:
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.
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:
Unfortunately, there are certain materials that can’t be included in a VAT reclaim, such as:
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.
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Are we able to reclaim the VAT if we are the developer and plan to sell the new house (through an estate agent) which we have built. Thanks