This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.


Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

VAT from insurance house rebuild

Posts: 1
Joined: Sat Feb 09, 2019 8:57 pm

VAT from insurance house rebuild

Postby Abbots » Sat Feb 09, 2019 9:14 pm

Hi there

We recently settled with our insurance company who gave us a cash settlement after following a fire which destroyed our home. We have used this money and topped up from savings to complete the rebuild. I was told I could claim back the VAT on the money used. Is this correct, are there specific areas of the build that I can/cannot claim back?


Posts: 572
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT from insurance house rebuild

Postby les35 » Mon Feb 11, 2019 9:29 am

The DIY scheme allows you to recover VAT on materials you use to build your own house.

Or, and it is simpler, engage a contractor to do it all zero rated, so you don't have to pay the VAT.

Posts: 8
Joined: Tue Feb 11, 2014 3:14 am

Re: VAT from insurance house rebuild

Postby kingmaker » Mon Feb 11, 2019 3:21 pm

I agree with the above. However zero-rating can only apply to the construction of a new dwelling where the site has been completely cleared to ground level (although cellars, basements and the slab may be retained). If that is the case, the whole of a destroyed property is zero-rated for VAT purposes, although it remains payable on demolition costs and professional fees. VAT is recoverable through the DIY scheme or buy hiring a contractor and he will not charge you VAT.

In terms of repaired damage on residential buildings where VAT is irrecoverable, it is usual practice for insurers to pay the VAT element up to the sum insured – the sum insured being based on the total rebuild cost from scratch as opposed to the repair cost.

You can also get direct advice from HRMC on VAT DIY helpline 0300 200 3700.
I'm looking for VAT advisory work & subcontracting work from accountants

Posts: 572
Joined: Wed Aug 06, 2008 3:09 pm

Re: VAT from insurance house rebuild

Postby les35 » Mon Feb 11, 2019 5:08 pm

HMRC will not generally provide 'advice' to enable you to make the best decision taking into account your particular circumstances.

Return to “VAT & Excise Duties”