Guidance

VAT refunds for conversions if you’re a DIY housebuilder

Check if you can claim a VAT refund using the DIY housebuilders scheme, if you’re converting an existing building into a dwelling.

• From: HM Revenue & Customs
• Published: 5 December 2023
• Last updated: 11 April 2024 — See all updates

You can claim a VAT refund once under the DIY housebuilders scheme if you’re building or converting your own property.

If you’re building a new home, you’ll need to read VAT refunds for new builds if you’re a DIY housebuilder.

Using the DIY housebuilders scheme

You’ll not be charged VAT if you buy a converted house from a property developer. This is because the sale of the house to you will be zero-rated and the developer can recover the VAT paid on building materials during the build.

If you convert the house yourself, you’ll not be able to benefit from the zero-rating.

The scheme allows you to claim back VAT for building materials you have bought. This is similar to buying a new house at the zero rate.

Conversions eligible for the scheme

You can make a claim for a refund on eligible goods and services if you have planning permission for a converted property. This must be used for residential accommodation and not for a business purpose. You must:

• be converting a non-residential property into a dwelling to be used either by you or your relatives as a family home for residential or holiday purposes
• be converting a derelict residential property for either you or your relatives, that has not been lived in (for 10 years or more before the work began), into a family home for residential or holiday purposes
• have bought a converted building as a shell from a developer and have fitted it out to completion, for either you or your relatives as a family home for residential or holiday purposes

A building has been lived in if it has been used as a dwelling before.

This means that the building has been adapted or designed for use as someone’s home and has been used in this way.

Other types of conversion work eligible for the scheme

You can make a claim for the conversion of a non-residential building. This is when:

• the building (or part) being converted has never been used as a dwelling or number of dwellings and is converted into a dwelling, or intended for use solely as a relevant residential purpose
• in the 10 years immediately before the start of the work, the building (or part) has not been used as a dwelling or number of dwellings

Examples of a non-residential conversion include the conversion of:

• a commercial building (such as an office, warehouse, shop, and so on)
• an agricultural building (such as a barn)
• a redundant school or church into a building designed as a dwelling

Conversions not eligible for the scheme

You’re not eligible to use the scheme if:

• you’re converting a property that, because of a term in the planning permission (or similar permission such as a planning agreement) cannot be sold separately or used separately
• you’re converting a property that either you, or your relatives, do not intend to live in, but intend to sell or let out, or use for any other business purpose — a business purpose includes dwellings built because you need to live where you work
• your building will be used for a business purpose and you are a:
  • speculative developer
  • landlord
  • bed and breakfast operator
  • care home operator who make a charge (even if not for profit) to their residents
  • membership club and association

Meaning of a dwelling

A building is a dwelling when each of the following are satisfied:

• the dwelling consists of self-contained living accommodation
• there is no direct internal access from the dwelling to any other dwelling or part of a dwelling
• the separate use of the dwelling is not prohibited by the terms of any covenant, statutory planning consent or similar provision
• the separate disposal of the dwelling is not prohibited by the terms of any covenant, statutory planning consent or similar provision
• statutory planning consent has been granted in respect of that dwelling and its construction or conversion has been carried out in accordance with that consent

A combination of buildings can form a single dwelling so that they’re designed to function together for that purpose. For example, where you have 2 buildings, one building may comprise of a lounge and kitchen, and the other comprises of bedrooms and a bathroom. The buildings must be constructed or converted under a single project and single planning consent.

The occupancy restrictions will be given in the planning consent. It will stop the building being used separately from another building, or from being sold (or otherwise disposed of) separately from another building.

Converting a residential derelict building

You cannot live in a residential derelict building any time before work has started. This will be counted as falling within the empty house 10-year period. Once work has started, you can live in the building whilst the remainder of the work is carried out.

You will need a letter from an Empty Property Officer when you make a claim for the conversion of a residential derelict building. This will be enough evidence to demonstrate the building was not lived in for the 10 years immediately before work started.

If you cannot get a letter from an Empty Property Officer, you must provide alternative evidence such as:

• Electoral Roll
• Council Tax records
• utility company records
• confirmation of a property being empty by a reliable witness, for example solicitor or estate agent

Occupation does not include a property used for storage for:

• a business
• illegal occupation by squatters
• occupation by a guardian who is there to deter squatters

A caretaker or housekeeper is not classified as a guardian.

For domestic garages you will need to demonstrate that the building was not used to store vehicles for 10 years immediately before work started.

You’ll need to show:

• proof that the garage was not domestic
• proof that the garage has been adapted for a considerable amount of time for use of a different purpose

If the property is used occasionally for example as a second home, this does not meet the 10-year condition.

Converting a building that has been used partially as a dwelling

A conversion takes place when you only use the non-residential parts of the building to create your new dwelling. You are not eligible for the scheme if the conversion has non-residential and residential parts. 

For example, a claim will not be paid if you convert a 2-storey public house with both living areas and bar areas into a single house. However, if you only convert the bar area into an individual flat with the access to the property above blocked, this will qualify a VAT refund.

Change from conversion to new build

If you have planning consent for a conversion, but the property must be demolished, then you’re no longer converting a property but creating a new build. You’ll need new planning consent to show a new build is taking place to qualify for the DIY housebuilders scheme and make a claim for a new build.

Find out about VAT refunds for new builds if you’re a DIY housebuilder.

Planning and starting your project

You can claim for VAT on building materials incorporated in the building (or its site) and for conversion services supplied to you.

You’ll need to understand the VAT costs and what you can claim for before starting a self-build project.

To claim a VAT refund, you must show evidence that the works are lawful by having the appropriate planning permission.  

You’ll need to send us a copy of the planning permission, which will be either:

• a full planning permission
• an outline planning permission and approval of reserved matters
• permitted development rights such as a local development or neighbourhood development order

If your planning permission has been issued in 2 parts (an outline and an approval), we’ll need to see both.

If your planning permission is subject to a Section 106 Agreement (in Scotland a Section 75 Agreement), we’ll need this document.

Do not send original documents as we will not be able to return them to you.

Approval for building regulations purposes is not planning permission.

If you’ve a revised or amended planning permission, you’ll need to send this and any previous permissions.

Employing a builder to do the work

You do not need to do all, or any, of the work yourself. You can claim for eligible goods you buy and give to your builder to incorporate into the building (or its site). The work must be carried out before the date of completion.  

VAT on goods

VAT is charged at the standard-rate on most building materials by suppliers. This includes goods imported from outside Great Britain (England, Scotland and Wales).

Contractors will charge VAT at the same rate as the services they supply. When converting a qualifying property, their services will be reduced rated. This means the supply of building materials installed by the contractor will also be reduced rated.

Make sure you are charged the correct amount of VAT throughout the course of the building work, as you can only claim back VAT that has been correctly charged.

VAT on building land or buildings for conversion

The seller will not charge you VAT if you buy a building that is intended (following conversion) for use as a dwelling or a relevant residential purpose. You must declare your intention to them before you buy the building.

If you intend to use the building solely for a relevant residential purpose, you must tell us using form VAT 1614D.

You may be charged VAT on the sale price, if the seller does not know what your intentions are. If you pay VAT to the seller, who was entitled to charge it, you or the vendor cannot claim it back from us.

Goods and services you can or cannot claim for

A builder can sometimes charge VAT at the reduced rate of 5% for their services on a conversion.

If you are converting a non-residential building, you can claim the VAT charged by your builder for converting the building.

You can only claim goods that are building materials.

You cannot claim for:

• fitted furniture, other than fitted kitchen furniture, whether bought ready to fit, in kit form, or materials for the construction of fitted furniture
• most electrical and gas appliances, for example, washing machines, dryers, refrigerators, and freezers, doorbells, and electrically operated doors (or door locks) and gates
• carpets, underlay and carpet tiles
• garden ornaments, sheds, and greenhouses
• plant, tools, and equipment
• consumables that are not actually incorporated in the building (for example, sandpaper, white spirit, and so on)
• building land

Find out more information about goods and services you can or cannot claim for.

Furniture items that are building materials  

These include finished or prefabricated kitchen furniture and materials when constructed at the same time and incorporated in a building.

Items that are not furniture but are building materials  

You can claim for:  

• basic storage facilities formed by becoming part of the fabric of the building, such as airing cupboards and under stair storage cupboards  
• items that provide storage capacity because of their primary function, such as shelves formed by constructing simple box work over pipes, and basin supports with a simple cupboard beneath  

You can also claim for basic wardrobes installed on their own with all the following characteristics.

1. The wardrobe encloses a space bordered by the walls, ceiling and floor. Units, for example, whose design includes an element to bridge over a bed or create a dressing table are furniture and cannot be claimed.

2. The side and back use 3 walls of the room (such as across the end of a wall), or 2 walls and a stub wall. A wardrobe installed in the corner of a room where one side is a closing end panel is furniture and cannot be claimed.

3. On opening the wardrobe, you should see the walls of the building. These would normally be either bare plaster or painted plaster. Wardrobes with internal panelling, typically as part of a modular or carcass system, are furniture and cannot be claimed.

4. The wardrobe should have no more than a single shelf running the full length of the wardrobe, a rail for hanging clothes and a closing door or doors. Wardrobes with internal divisions, drawers, shoe racks or other features are furniture and cannot be claimed.

Items that are furniture but are not building materials  

You cannot claim for finished or prefabricated furniture and materials for the construction of fitted furniture, such as:  

• wardrobes (other than basic wardrobes) including basic wardrobes installed as part of a larger installation of furniture in the room  
• vanity units  
• wall units, such as bathroom cabinets  

Electrical and gas appliances  

You cannot normally claim for electric and gas appliances, even if they need to be incorporated in a building as a requirement of Building Regulations. You can, however, claim for them when they are:  

• designed to heat space or water (this includes cookers designed to have a dual purpose to heat the room or the building’s water)  

• designed to provide ventilation, air cooling, air purification, or dust extraction  
• door entry systems, waste disposal units or machines for compacting waste that are intended for use in a building designed as a number of dwellings, such as a block of flats  
• burglar alarms, fire alarms, fire safety equipment or devices for summoning aid in an emergency (not telephones or electric gates and barriers)  
• lifts or hoists  

You can claim for appliances powered by other fuels. These are building materials when they are ordinarily incorporated in the building. For example, solid fuel or oil-fired cookers incorporated in a building are building materials. 

Find out more information about goods and services you can or cannot claim for.

Building materials

For VAT purposes, building materials are items that meet all the following:

• they are incorporated in the building (or its site)
• they are incorporated during the conversion of the building
• they are ordinarily incorporated by builders in that type of building
• other than kitchen furniture, they are not finished or prefabricated furniture, or materials for the construction of fitted furniture
• with certain exceptions, they are not electrical or gas appliances
• they are not carpets or carpeting material

Meaning of incorporated

You can only claim for building materials that are incorporated in a building (or its site). This happens when the item is fixed in such a way that its fixing or removal would either:

• need the use of tools
• result in either the need for remedial work to the fabric of the building (or its site), or substantial damage to the goods themselves

Examples of items incorporated in a building (or its site) include:

• built-in, wired-in or plumbed-in appliances such as boilers or wired-in storage heaters (you can only claim for certain gas and electrical appliances, but not items such as hobs and ovens)
• flooring (you cannot claim for carpets)
• soft landscaping (such as top-soil and turf)

Examples of items that are not incorporated in a building (or its site) include free standing:

• appliances that can be plugged in
• furniture such as sofas, tables, and chairs, and so on

During the conversion

This means that qualifying goods are:

• incorporated in the building (or its site) before the conversion of the building is completed
• used to produce works that allow the building to be used — as well as the fabric of the building, this will include works such as drainage, main paths on the site, driveways, retaining walls, and boundary walls and fences

Examples of works that do not qualify include:

• outdoor leisure facilities such as tennis courts and swimming pools
• fish ponds, rockeries, and other ornamental works
• works outside the site of the building

Meaning of ordinarily

An item is ordinarily incorporated in a building (or its site), when it’s incorporated in a generic building such as a residential dwelling, church, or school. Generic types of building are not split into sub-categories. There’s no distinction between large, detached houses and small terraced houses.

This is the same when determining if the goods themselves are usual for that type of building. For example, a tap would be regarded as being ordinarily incorporated whether it is chromium or gold plated.

When work is complete

This is when it has been finished according to the original plans. A building is still under construction up until the date when a certificate of completion is issued by the local planning authority.

Working out your claim

You’ll need to check you have been charged VAT. There is no VAT to claim on zero-rated goods and services, or on supplies bought from someone who is not VAT registered.

If you have been charged VAT, your invoice will normally show the amount of VAT separately. Sometimes only the tax inclusive amount and the VAT rate will be shown.

You can work out the amount of VAT you have been charged on these invoices as follows:

• tax inclusive amount x (1 ÷ 6) = VAT at 20%
• tax inclusive amount x (1 ÷ 21) = VAT at 5%

Credits and discounts

You must reduce your claim for any credits or discounts given by your supplier, for example, returned goods or bulk purchases.

Apportionment for non-eligible goods and services

Where an invoice includes goods and services you cannot claim for, you must reduce your claim by an appropriate amount.

If you get an all-inclusive invoice from a contractor, you must be able to show that the amount of your claim is fair and reasonable. You can do this by using tendering, estimation or specification documents agreed with your contractor.

VAT charged incorrectly

VAT charged incorrectly cannot be claimed from HMRC. When an error happens, such as when VAT is charged on work that should be zero-rated or reduce rated, it is your supplier’s responsibility to make the necessary adjustments.

Imported building materials

You can claim back VAT paid on importing building materials. You must keep evidence of the VAT paid, together with the original shipping or transit documents showing the goods imported from abroad.

Making a claim

Claim for work in progress

You cannot make a claim whilst the work is in progress. You can only make a single claim when the conversion of the building is completed.

Documents needed for your claim  

When you make a claim you need to send us:  

• the claim form (for claims by post), including a schedule of all the invoices you want to claim for 
• your claim calculations  
• evidence the conversion is completed  
• a copy of the planning permission  
• plans of the building  

Do not send original documents as we will not be able to return them to you.

VAT invoices

You must keep a record of all invoices, bills, credit notes and other documents to support the amount of your claim. We’ll contact you to let you know which invoices you need to send us.   

You need to record these details in a schedule of invoices template (ODS, 4.16 KB).

You must have a VAT invoice for all the eligible goods you claim for.  

The goods or services must have been supplied to you and we may ask you to prove that you have paid for them. The VAT invoice will need to show:  

• the supplier’s name, address and VAT registration number 
• date of issue
• the quantity and description of either the goods or services, or both  
• your name and address if the value is more than £250  
• the price of each item showing the VAT treatment

Conversions completed before 5 December 2023

You can only make a single claim under the scheme, and you must do this no more than 3 months after the conversion is completed. The 3 months start from the date of the completion certification or other evidence that you provide to support completion of the property.  

If you cannot make your claim within the 3 months allowed by law, you should write to HMRC explaining the reasons for the delay. 

You cannot make a second claim if you choose a date earlier than the completion certificate and use other evidence of completion. 

If you have already submitted a claim form, you can send additional information or invoices for either a claim which: 

• has not yet been paid   
• has been paid — you should do this no later than 4 years after the building has been completed 

You must include your claim reference number for all additional information.

Conversions completed on or after 5 December 2023

You can only make a single claim under the scheme. You must do this no more than 6 months after the conversion is completed.  

The 6 months start from the date of the completion certification or other evidence that you provide to support completion of the property.  

If you cannot make your claim within the 6 months allowed by law, you should write to HMRC explaining the reasons for the delay.  

You cannot make a second claim if you choose a date earlier than the completion certificate and use other evidence of completion. 

If you have already submitted a claim form, you can send additional information or invoices for either a claim which: 

• has not yet been paid 
• has been paid — you should do this no later than 4 years after the building has been completed 

You must include your claim reference number for all additional information.

How to make your claim  

Use the online service or fill in form VAT431C to make a claim.  

Using an agent

You can authorise an agent to act on your behalf (64-8). Your agent will then be able to complete and submit the DIY housebuilder’s claim form for you. Your agent will also be able to submit invoices and any other information requested by HMRC.

The authorisation will only cover one DIY claim. You will need to enter your National Insurance Number on the 64-8.

It is your responsibility to ensure that the information on the claim form is accurate and complete to the best of your knowledge. You will need to confirm this to your agent before they submit the claim.

VAT refunds made under the DIY housebuilders scheme will be paid into the bank account of the DIY housebuilder.

You should keep a copy of your claim as we may ask you questions about it.

Correcting errors

If you discover a claim that you’ve made contains errors, you should contact us as soon as possible.

If we discover an error in your claim you will be liable to a penalty if:

• the error is deliberate 
• reasonable care has not been taken to prevent the error from happening

How long it takes

Claims online

We will write to you within 2 weeks to tell you your claim reference number. We may also ask you any questions we have about your claim.

We aim to process your claim within 3 weeks after we have received all information needed from you. If your claim is successful, we will write to tell you when you can expect to receive your VAT refund from the National Payment Centre.

Claims by post

We will write to you within 4 weeks to tell you your claim reference number. We may also ask you any questions we have about your claim.

We aim to process your claim within 6 weeks after we have received all information needed from you. If your claim is successful, we will write to tell you when you can expect to receive your VAT refund from the National Payment Centre.

Claims rejected or not paid in full

If your claim is rejected or not paid in full, we’ll tell you the reasons why. If you do not agree with our decision, you can either:

• ask for it to be reviewed by an HMRC officer not previously involved in the matter
• appeal to an independent tribunal

If you ask for a review you can still appeal to the tribunal after the review has finished.

For a review you should:

• write to the address given in the decision letter within 30 days of the date of the letter
• give your reasons why you do not agree with the decision

If you accept the offer of a review, then you cannot appeal to a tribunal until the review officer tells you the outcome.

To make an appeal to the tax tribunal, you should send them your appeal within 30 days of the date of the decision letter.

You can get more information about appeals and reviews.

Published 5 December 2023
Last updated 11 April 2024 + show all updates

1. 11 April 2024

   A schedule of invoices template and information on using an agent when making a claim has been added.

2. 15 December 2023

   'Date of issue' has been added to the list of what an invoice must show. Information to tell you not send original documents as we will not be able to return them to you, has also been added.

3. 5 December 2023

   First published.