Reclaiming VAT

One of the advantages of a self build is that you can claim back VAT on building materials bought for your project from HM Revenue & Customs using the DIY Housebuilders Scheme. As VAT is not charged on sales of new houses, the Scheme puts you in the same position as someone buying a new house from a developer. The process is reasonably straightforward but it does require you to keep accurate records and apply for the refund in good time.

You will have to pay VAT on materials you buy during the build but you should not be charged VAT on construction services, so scrutinise invoices from your contractors to ensure that they are not charging you that extra 20%. If VAT is charged in error by a contractor you cannot claim it back from HM Revenue & Customs, it must be credited by the contractor. 

You can usually make a claim for a VAT refund using the DIY Housebuilders Scheme if the property is a new domestic residence and it will be occupied by you or your relatives. Please note there are other conditions which you should check with HM Revenue & Customs.

Your claim must be made within three months of the house being completed and you only get one chance to claim, so you need to get it right first time.

Most building materials bought from a VAT registered supplier, which are incorporated into the building or its site, can be claimed for. Below is a list of the type of items that cannot be claimed for:

  • Finished or prefabricated furniture, or materials for fitted furniture, other than fitted kitchen furniture
  • Most electrical and gas appliances such as cookers, washing machines, fridges and freezers
  • Carpets, underlay and carpet tiles
  • Garden furniture, ornaments, sheds and greenhouses
  • Plant, tools and equipment including plant hire costs
  • Consumables such as sandpaper, white spirit etc.

It is important that you read and understand the relevant rules before you start your project, otherwise you may find yourself ineligible to claim. Remember also to keep an eye out for any changes to the rules during your project to ensure you continue to be eligible.

Keeping accurate records as you go along with the project is the key to a successful claim. Make sure you always get a VAT invoice for your purchases and if possible ensure your name and address is included.

Retain all your original invoices together and make a habit of regularly listing every invoice in a book or on a spreadsheet, showing the purchase price, the VAT, the supplier and the invoice reference. You will need this information in order to complete the VAT claim form, and it is so much easier if this is collated as you go along.

Always make sure you obtain a VAT invoice - a card payment advice or a receipt without a VAT number will not be accepted by HM Revenue & Customs.

There's plenty of help to be found by reading the appropriate guidance on the HM Revenue & Customs website. This will assist you to understand exactly what can and cannot be claimed, and to establish that your project will qualify. Details can be accessed here: www.hmrc.gov.uk 

Once the project is finished and you have your Completion Certificate or equivalent from your local authority, you will need to complete claim form VAT 431NB and submit it to HM Revenue & Customs with your invoices and other documents. You may find it easier to fill in the form as your work progresses. You can obtain the claim form and guidance notes at any time by either contacting the HM Revenue & Customs National Advice Service on 0845 010 9000 or by downloading it from the website Form VAT 431NB. The guidance notes clearly explain who is eligible, how to make a claim and what can be claimed.

Please note the information contained on this page does not constitute tax advice and is not a definitive guide to the HM Revenue & Customs DIY Housebuilders Scheme. We suggest you contact HM Revenue & Customs or a professional tax advisor if you require further information on the Scheme.