VAT Refund for DIY Housebuilders

If you're building your own home or converting a property into a dwelling, you can reclaim the VAT you've paid on building materials through the DIY housebuilders scheme. This scheme puts you in a similar position to someone buying a newly built home from a developer, who pays...

Introduction

Who can claim

You can claim a VAT refund if you're building or converting a property that will be used as a home for you or your relatives, either for residential or holiday purposes.

For new builds, you can claim if you're:

Constructing a new dwelling from scratch
Buying a new building as a shell from a developer and fitting it out to completion

For conversions, you can claim if you're:

Converting a non-residential property (such as a barn, warehouse, office, shop, church or school) into a dwelling
Converting a residential property that has not been lived in for 10 years or more immediately before work started
Buying a converted building as a shell from a developer and fitting it out to completion

You can also claim for constructing a new charity building for charitable or relevant residential purposes.

Who cannot claim

You're not eligible if:

You intend to sell or let out the property rather than live in it yourself or house your relatives
The property will be used for business purposes, including as a bed and breakfast, care home (even if not-for-profit), or because you need to live where you work
The planning permission prevents the property being sold or used separately from another building
You're converting a property that has both residential and non-residential parts (though you may be able to claim if you only convert the non-residential part into a separate dwelling)

If you're a landlord building or converting properties to let, you cannot use this scheme.

What counts as a dwelling

A building qualifies as a dwelling when all these conditions are met:

It consists of self-contained living accommodation
There is no direct internal access to any other dwelling
The separate use of the dwelling is not prohibited by planning consent or covenant
The separate disposal (sale) of the dwelling is not prohibited by planning consent or covenant
Statutory planning consent has been granted and the work has been carried out in accordance with it

A combination of buildings can form a single dwelling if they're designed to function together and are built under a single project and planning consent.

What counts as a new build

A building is considered newly constructed when:

It is built from scratch and any pre-existing building is completely demolished to ground level before work starts (you can keep cellars, basements and the ground-level slab)
The new building uses no more than a single facade (or double facade on a corner site) of a pre-existing building, provided keeping the facade is a condition of planning consent
It's a semi-detached building
An enlargement or extension creates an additional dwelling that is wholly within the extension and meets the conditions of a dwelling in its own right

You can ignore party walls shared with neighbouring properties that are not being developed.

What counts as a conversion

For conversions of residential properties, the building must not have been lived in for 10 years immediately before work started. "Lived in" means the building was used as someone's home. Storage, illegal occupation by squatters, or occupation by a guardian to deter squatters does not count as living in the property. However, occupation by a caretaker or housekeeper does count.

If you have planning consent for a conversion but the property must be demolished, you're no longer converting but creating a new build. You'll need new planning consent showing a new build to qualify.

What costs you can claim

Building materials: You can claim VAT on building materials that are incorporated into the building or its site.

Services (conversions only): For conversions, you can claim VAT on services supplied to you. For new builds, services should be zero-rated by contractors, so you won't pay VAT on them in the first place.

Items you can claim for include:

Structural materials (bricks, blocks, beams, timber, cement, concrete, aggregate)
Roofing materials and insulation
Doors, windows and door furniture
Plumbing materials and sanitaryware (baths, basins, toilets, bidets, showers)
Heating systems (boilers, radiators, underfloor heating)
Electrical cables and fittings (not including appliances)
Kitchen units (fitted kitchen furniture only)
Decorating materials
Drainage and plumbing fittings
Flooring materials (but not carpets or underlay)
Blinds (including those fixed within window panes, but not electrical blinds)
Alarms and security systems
Air conditioning
An Aga (only if it also heats space and water)

Items you cannot claim for include:

White goods appliances (washing machines, fridges, freezers, cookers unless they also heat space and water)
Carpets, underlay and carpet tiles
Fitted furniture other than fitted kitchens (wardrobes, bathroom cabinets unless they support sinks)
Freestanding furniture
Garden items (sheds, greenhouses, ornaments, artificial grass, barbecues)
Tools and equipment (including hire of diggers without an operator)
Consumables not incorporated into the building (sandpaper, brushes, fuel, protective equipment)
Professional fees (architects, surveyors, building regulations fees)
Utility connections (electricity, gas, broadband, telephone)
Audio-visual and entertainment systems (TVs, speakers, amplifiers)
Electrically operated doors, gates and windows
Doorbells and door entry systems (unless the claim is for a flat)
Building land

Delivery charges can be claimed if they're invoiced with materials.

Employing builders

You don't need to do the work yourself. You can employ builders and claim for eligible goods you buy and give to them to incorporate into the building. For new builds, builders should charge zero-rated VAT on their services when constructing a qualifying new dwelling. For conversions, builders will charge VAT at the standard rate on services, which you can then claim back.

Make sure you're charged the correct VAT rate throughout the project, as you can only claim back VAT that has been correctly charged.

Documents you need

To make a claim, you must provide:

Building regulations completion certificate (copies accepted)
Evidence of planning permission – either full planning permission, or outline planning permission and approval of reserved matters (copies accepted)
Plans of the building

If your planning permission was issued in two parts, you must provide both. If your planning permission is subject to a Section 106 Agreement (or Section 75 Agreement in Scotland), you must provide this document.

Do not send original documents as HMRC cannot return them.

Note that approval for building regulations purposes is not the same as planning permission.

Conversion-specific evidence

When converting a residential derelict building, you'll need a letter from an Empty Property Officer confirming the building was not lived in for 10 years immediately before work started. If this isn't available, provide alternative evidence such as:

Electoral Roll records
Council Tax records
Utility company records
Confirmation from a solicitor or estate agent

Claim deadlines

The deadline depends on when you completed the building:

Before 5 December 2023: You must claim no more than 3 months after completion
On or after 5 December 2023: You must claim no more than 6 months after completion

How to submit your claim

Online: You can claim online through HMRC's digital service. You'll need to sign in or create an account if you don't have one.

By post: If you cannot use the online service, complete form VAT431NB (for new houses) and send it to:

BT&C VAT

HM Revenue and Customs

BX9 1WR

HMRC offices do not accept hand-delivered or drop-off claims.

You'll need to provide information about your invoices on the claim form.

Getting help

If you have questions about the DIY housebuilders scheme, contact the DIY and House Building VAT Enquiries Team on 0300 322 7073, Monday to Friday, 8:30am to 4:30pm.

Sources

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.