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Claiming VAT on a new build

Good news for self-builders: you can get some money back on the cost of building your new home!

The Government allows you to reclaim some of the VAT you’ve paid out on a new build or conversion project. With the standard rate of VAT at 20 per cent at the time of writing, that’s a lot of money – yet it’s something which many self-builders overlook. That’s something that definitely needs to change – so in this post, we’re going to tell you what you can claim and how to do it.

Am I eligible?

The scheme in question is administered by HMRC and is called the DIY Housebuilders’ Scheme. People who buy a new house from a developer don’t pay VAT on it, so the government brought this legislation in to make sure self-builders weren’t being disadvantaged.

To be able to reclaim your VAT, you must be building a new home, converting a non-residential building (for example a barn or an office) into a home, or renovating a home that hasn’t been lived in for 10 years or more.

The key thing here is that you are creating a new home, so home extensions, refurbishments and annexes (on a home that already exists) aren’t eligible.

The home needs to be for you or a family member to live in or use for holidays. It can’t be a business investment – a buy-to-let property or a holiday home you’re going to rent out.

If you’re demolishing a building, it must be demolished completely, which means there’s nothing left above ground – you can keep the ground-floor concrete slab and the basement. The exception to this is where it’s a condition of your planning permission that you keep one or more of the building’s sides.

If you’re building a garage as part of the project, you can include it in your claim, but you can’t include any other buildings – workshops, storerooms, stables and even rooms above the garage. You can include materials used in landscaping and groundwork, like paving, fencing, turf or plants, as long as you have planning permission for this work.

Your contractor needs to be VAT registered for you to make a claim. At the time of writing, they can be based anywhere in the EU – you’ll just need to convert their invoices into sterling if they’re not already.

How to claim

First, you need to make sure you obtain and keep all the necessary receipts and invoices. We recommend keeping them all together to make things easier when you come to claim.

These must be proper VAT invoices, not just email receipts or order confirmations, with the supplier’s name and VAT number, the date of the invoice, a description of the goods or services and the value of the invoice. They must be the original documents and in your name, not someone else’s. If an invoice is in your business’s name, you’ll need proof that you’ve refunded the amount from your personal bank – for example, a bank statement.

HMRC will also ask for:

  • Your planning permission documents
  • A building regulations completion certificate, or other proof that the house is finished

Most crucially, you need to submit your claim, accompanied by all the relevant documents, to HMRC within three months of your completion certificate being issued.

How much VAT can I reclaim?

You pay VAT at the standard rate of 20 per cent on building materials, and you can reclaim this. It’s reduced to five per cent on some energy-saving items, such as insulation, solar panels and heat pumps; you can reclaim this too.

VAT on labour, or labour and materials combined, is zero-rated if you’re building a new home, which means you won’t pay any so there’s nothing to reclaim. But for conversions and renovations, it’s five per cent, and you can reclaim this.

You need to make sure that you’ve been charged VAT correctly. HMRC won’t refund you if you’ve been overcharged – you’ll need to take that up with your builders as soon as possible.

What materials can I claim for?

The key to whether you can claim for materials used to build your home is whether they’re part of the fabric of the building.

You can claim for these things:

  • Building materials: concrete, blocks, bricks, insulation, sand, cement, plaster, timber, roofing materials, stairs, windows, doors, guttering, paint
  • Heating, air conditioning and ventilation equipment, solar panels, hot and cold water tanks
  • Sinks, baths, showers and lavatories, plus bathroom accessories like fixed towel rails
  • Fitted kitchen furniture such as units, sinks and worktops
  • Extractor fans
  • Fittings: light fittings, flooring, fireplaces, mirrors, TV aerials, curtain poles and rails
  • Swimming pools which are part of the house
  • Burglar and fire alarms
  • Letterboxes
  • Power points and wiring

What materials can’t I claim for?

  • Kitchen appliances, even if they’re integrated
  • Sandpaper, white spirit, paint brushes and tools
  • Bedroom and bathroom furniture
  • Curtains and blinds
  • Carpets
  • Garden furniture and sheds
  • Equipment hire, such as scaffolding, JCBs or portaloos
  • Professional fees, for example for an architect or a project manager
  • Electrical appliances

You can claim delivery charges if they’re on the invoice for the goods, but not if they’re on a separate invoice.

Whom do I contact to make a claim?

If you’re reclaiming VAT on a new build, the form you need from HMRC is called VAT431NB. For a conversion, you need VAT431C. There’s a link to both forms at www.gov.uk/vat-building-new-home/how-to-claim.

You can only send in one claim, so it’s important to get it right. The form has guidance to help you fill it in and provide the right accompanying documents, and you can call HMRC’s helpline on 0300 322 7073 with any queries between 8.30am and 4.30pm Monday to Friday.

You should post your completed form and all the documents to HM Revenue and Customs – National DIY Team, S0970, Newcastle, Tyne and Wear NE98 1ZZ. HMRC will usually acknowledge your claim within five working days and deal with it within six weeks.

South east London architects Bluelime Home Design has been helping people across London and Kent design and build their dream homes for 13 years – and we can advise and help you at every stage of the process, from your first tentative ideas to your final bits of admin. We now have offices in DartfordBromleyErithBexley and Croydon - call us on 01322 517632 to chat about the architectural services we offer or to arrange a free architect consultation.

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