VAT Reclaims on New Build and Conversions

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The DIY Housebuilders Scheme (Notice VAT431NB for new builds and Notice VAT431C for conversions) allows you to reclaim VAT from HMRC that you have paid out for your project if you are:
       (1)  building a new house
       (2)  converting a building into a new dwelling
       (3)  bringing an existing dwelling that has not been lived in for 10 years back in to use.

The project must create a new dwelling, so most new build projects will fall into this bracket. Extensions and refurbishments that do not create a new dwelling, and so are not eligible.

To claim, your project must be eligible and lawful, for personal occupation by you or a family member and evidence of completion must be provided.

Only one claim is allowed, and all relevant documentation and invoices have to be submitted to HMRC within three months of your completion certificate being issued.

You will usually get the refund within 30 working days of sending in the claim.

Projects You Can Reclaim VAT On

The type of projects you can reclaim VAT on under the DIY Housebuilders’ scheme include:

  • New builds. Creating a new dwelling built from scratch, providing it is to be used by you or your relatives as a family home for residential or holiday purposes.
  • Garages for use with the new dwelling 
  • Conversions that create a new dwelling. 
  • Renovations that bring a dwelling that has not been lived in for 10 years back into use as a dwelling
  • If the new build or conversion is a holiday home for you and your family’s personal use
  • Landscaping and outside works covered by your plan

Projects You Cannot Claim VAT Back on Include:

  • Extensions and self-contained accommodation (for example, a granny annexe) that do not create an independent dwelling, unless built at the same time as part of a new dwelling
  • Separate buildings that are part of your planning permission, apart from a garage — for example, a garden store or a detached swimming pool building
  • Refurbishments of existing dwellings (unless empty for 10 years
  • A new dwelling constructed for any business use, such as a holiday rental or buy to let

Materials You Can Claim VAT Back On.

  • All materials normally incorporated in a new
  • Electrical and plumbing materials
  • Fitted furniture such as kitchen units and worktops   
  • Extractor fans
  • Fittings, such as light fittings, wooden floor systems, linoleum, floor tiles, door furniture, fireplaces and fires, fixed towel rails, mirrors, solar panels, boilers, sewage treatment plants, TV aerials, curtain poles
  • Swimming pools and saunas inside or linked to the new dwelling
  • Delivery charge included on an invoice for materials

Special Circumstances

These include. Renovations to dwellings empty for two years or more are eligible for the reduced rate of VAT of 5% via a VAT-registered contractor Works involving a net change in the number of dwelling units are also eligible for the reduced rate of VAT of 5%. Examples include converting two cottages into one house or reverting three flats back into a house. Some adaptations work to alter a house for someone who is disabled is zero rated for VAT. These reduced rates of VAT are only available via VAT-registered contractors and not under the DIY Housebuilders Scheme.

Valid VAT Invoices

Ensure must you retain all valid VAT invoices, as the originals must be submitted to HMRC with your claim. Electronic payment receipts and emails confirming orders are not valid VAT invoices and so any VAT paid is potentially lost.

Invoices should include:

  • the supplier name
  • their VAT number
  • the invoice date
  • a description of the goods supplied (and services if applicable)
  • the value of the invoice

Manypurchases are made online these days, so ensure that you obtain a valid VATinvoice when buying, as this may prove difficult to obtain at a later date.

For further information on this or any other tax, business or software related subjects relating to your property business then please contact us on 01332-369999 or via our website 

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