Reclaiming VAT on a Self-Build

When you’re building your own home or converting an existing building into a dwelling, there are certain building materials and services which you can reclaim some VAT on.

Many people embarking on a self-build project miss out on reclaiming VAT simply because it’s easy to overlook with everything else going on, but you could save yourself thousands of pounds by taking the relatively straightforward step of applying to the HMRC.

Reclaim Rules and Eligibility

Thanks to the DIY Housebuilders Scheme (Notice VAT431NB for new builds and Notice VAT431C for a conversion), you can apply to the HMRC for some level of VAT refund if you’re building your own home, converting an existing building into a home or bringing an existing dwelling which hasn’t been occupied for a decade back into use.

In order to qualify for a self-build VAT reclaim you have to be able to prove that the property you are building will be your main residence or a holiday home for personal use, and won’t be used as a business premises.  That means, for example, that you couldn’t then turn it into a guest house or let it out, but having a home office to enable you to work from home is perfectly acceptable.

What Can You Claim on?

The current 20% rate of VAT applies on the supply of materials only, but there are certain materials you can claim back on. These include:

  • All building materials associated with building a new home (ie. cement, sand, plaster, bricks, concrete blocks, insulation materials, paints, doors and windows, guttering, stairs and timber)
  • Plumbing and electrical materials
  • Kitchen units, worktops and other fitted furniture
  • Boilers, solar panels, wooden floors, lino, floor tiles, fires and fireplaces, light fittings, mirrors, fixed towel rails, curtain track and TV aerials
  • Swimming pools linked to the new building
  • The delivery charges for all the above materials

The list of things you can’t claim back VAT on might surprise you, with carpets, scaffolding and equipment hire all exempt.

The supply of labour only or the joint supply of materials and labour is at 0% for new builds and a reduced rate of 5% for conversions or renovations which are bringing a property unoccupied for ten years back into use.  Once the work is complete, you can then apply to reclaim 5% VAT on all eligible materials and labour costs.

How to Apply

Throughout your project you should make sure you obtain and hold onto all invoices for eligible materials and labour, to ensure you have all the relevant supporting documentation when it comes to applying for a VAT refund.  Given how tricky it can be to know what exactly qualifies for a VAT reclaim, it can be worth seeking professional advice before you make an application – most tradespeople have only a vague idea of the rules around self-build projects and VAT, so approaching a qualified accountant for more in-depth advice is often the best route to take if you’re at all unsure about how much you might be due.

The government also operates a VAT refund helpline for further advice.

If you’re building a new home you will need to download and fill in the VAT431NB form from HMRC, while those undertaking a renovation or conversion will have to fill in a VAT431C form.

Remember, applications have to be made within three months of a project’s completion and the refund is usually issued within 30 days of the HMRC receiving your paperwork.  As well as the completed form, you will have to send your bank details, proof of planning permission, proof that the building work is complete (for example, a sign off letter from the local authorities), a complete set of building plans, any bills and credit notes you may have and your invoices, including estimates and tenders if the invoice hasn’t been itemised.