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Steve Allen, Director of VAT Solutions (UK) Ltd, provides a brief insight into the potential VAT benefits available for 'self-build' and similar projects.

Steve Allen

A pleasant task!

Subject to certain conditions, it is possible to reclaim the VAT on the cost of building your own home (often referred to as a ‘DIY claim’).

One of the great advantages of undertaking a newbuild, and one of the main reasons it is so cost efficient, is the fact that materials and labour supplied by the builder are zero-rated. You have to pay standard-rated VAT on any materials you buy yourself during the build, however, but one of the more pleasant tasks of building your own home is making a VAT repayment claim once it is complete!  Remember, you should not be paying out VAT on labour, so check the invoices from your builders to make sure they are not charging you that extra 17.5%.

Conversions and renovations

Conversions of non-domestic properties, such as barn conversions, are also zero-rated projects, but unlike new builds, you would have to pay 5% VAT on labour costs.  However, you can still include this VAT in the reclaim.

The same VAT rules which apply to conversions also apply to renovations of existing houses if they have been unoccupied for at least 10 years.  Note that there is also a 5% VAT rate for the renovation of dwellings which have been unoccupied for 3 years, the conversion of an existing domestic property into multiple dwellings, the conversion of a dwelling into a care home, or the conversion of a dwelling into bedsit accommodation.

Detailed proof

You can make a claim if the new house is an ordinary private domestic residence, and you will need detailed proof of the VAT paid on all the goods for which a claim is to be made. The claim must be made within three months of the building being completed, and you only get one chance to claim, so you need to get it right first time.

You can make a claim for most of the goods and materials bought from a VAT registered supplier which are incorporated into the building or the site. You cannot claim for free-standing furniture, carpets, curtains, white goods, trees and plants, burglar alarms, professional services, (such as architectural fees), equipment hire, transport of materials and tools used.

Hard work?

If, despite all the above, the idea of making a DIY claim still seems too much like hard work, you can always appoint us to do it for you!  We would agree a fixed fee with you at the outset that only becomes payable once you have received your refund.