Reclaiming self build VAT - All you need to know
- VAT can be reclaimed for self-builds for certain materials and services
- The build has to be a new or converted dwelling to be eligible
- Claims must be made within three months of completion
Buying a plot of land to build your dream home is an incredibly rewarding adventure. But there’s no denying it can be incredibly costly, too.
One way to mitigate that is by claiming back VAT on certain aspects of the build. Since home buyers don't pay VAT when buying a house on the market, this is a way to level the costs for self-builders.
If you’re planning to build your own home, it’s important to understand the process ahead of time so you know what you can reclaim and what to expect.
What self-builds are eligible?
Not all self-build projects are eligible for a VAT refund. You can only reclaim VAT if you're building a new home that's a dwelling in its own right — extensions or annexes to existing homes don't count.
The project also has to be for yourself or your family to live or holiday in. Any houses built to be sold on for profit or used for business, such as letting or a bed and breakfast, aren’t eligible for VAT refund. If you work from home, however, an office room won’t count as business use so you can still make a claim.
You can reclaim VAT on conversions as well. But this is only the case when converting a non-residential building like a barn that hasn’t been lived in for at least 10 years. If you’re buying a plot of land with a pre-existing residential property, generally you’ll have to demolish that and build new to be eligible for a VAT refund.
Also bear in mind that self-builds in mainland UK and the Isle of Man are eligible, but not projects in the Channel Islands.
What can you claim on?
Building materials and services have to qualify before you can claim back VAT. But working out exactly what aspects of the build fit that description is a little tricky. The list of eligible items is long, and it’s not always obvious what’s included.
As a general rule, any materials that are either an integral part of the building, or that can’t be removed without tools or causing damage, will qualify. But that’s obviously a very broad definition, encompassing everything from roofing beams to fitted towel rails.
Apart from the obvious structural materials like bricks, timbers and concrete, there are a number of items you might not expect you can claim on. The list also includes burglar and fire alarm systems, solar panels, fixed kitchen units, and even external landscaping like trees and turf.
Items that don't qualify include anything that isn't permanent or integral to the dwelling. That covers freestanding bedroom and bathroom furniture, appliances, and furnishings such as curtains and carpets. Hired equipment like JCBs and portaloos are also ineligible, as are consumables like sandpaper or paint brushes.
As for services, labour for new self-builds is zero-rated anyway so you won’t have anything to reclaim. You can’t claim back VAT on professional or supervisory fees from surveyors, architects or engineers.
What qualifies an item for VAT reclaim isn't always clear. For example, a standard non-fitted oven won't count, but a range that forms part of your central heating system might. But don't worry, an extensive list is provided as part of the application pack.
And if you’re still unsure, there’s no harm in putting an item down anyway. If it’s not eligible, it will just be crossed off without harming the rest of your claim.
How to apply for a VAT reclaim
To claim back your VAT you'll need to apply to HMRC by submitting a 431NB form for a new build, or a 431C for a conversion. An application has to be submitted within three months of completion, but it's best to do it as soon as possible.
Along with the completed claim forms, you’ll also need to send original copies of the following documents:
- All relevant VAT invoices, which show the supplier’s VAT registration number, your address, and the VAT amount converted to sterling if it isn’t already.
- Evidence of completion. This could be a completion certificate from the Building Control Body, a habitation or occupation certificate, a valuation rating or council tax assessment, or a bank letter stating that the last instalment of your building loan has been released.
All invoices must be valid — electronic receipts or order confirmation emails won't count. If your builders have purchased any materials on your behalf, you'll need to show proof that you reimbursed them from your personal bank account and paid the standard rate of VAT.
It's a good idea to download the application pack before you start work. That way you'll know what receipts and invoices you'll need and can gather them as you go, rather than digging through your records several months down the line.
You’re only allowed to make one claim against your build, so make sure you’ve included everything before submitting.
When it comes to bringing down the costs of a self-build, reclaiming your VAT is a must. As long as you keep track of your paperwork, it’s a painless process that can help make your dream build project a financial reality.
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