VAT refunds for new builds if you’re a DIY housebuilder
Check if you can claim a VAT refund using the DIY housebuilders scheme, if you’re building a new house.
A new build is a building that has been constructed from scratch and will generally not incorporate any part of an existing building.
If you’re converting an existing building into a dwelling, you’ll need to read VAT refunds for conversions if you’re a DIY house converter.
Using the DIY housebuilders scheme
You’ll not be charged VAT if you buy a new house from a property developer. This is because the sale of the house to you will be zero-rated.
If you build a house yourself, you’ll not be able to benefit from the zero-rating.
The DIY housebuilders 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.
New builds eligible for the scheme
You can make a claim for building materials if you have planning permission to do one of the following:
- construct a new dwelling to be used as a family home for residential or holiday purposes, by either you or your relatives
- buy a new building as a shell from a developer and fit it out to completion, for either you or your relatives as a family home for residential or holiday purposes
Types of new builds not eligible for the scheme
You are not eligible to use this scheme if you’ve:
- constructed a property that, because of a condition in the planning permission (or similar permission such as a planning agreement), cannot be disposed of or used separately
- constructed 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 also includes a dwelling built because you need to live where you work
Planning and starting your project
You can claim for the VAT on building materials incorporated in the building (or its site).
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. You must also make sure that planning permission has been granted.
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) then we will need to see both.
If your planning permission is subject to a Section 106 Agreement (in Scotland a Section 75 Agreement) then we will 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.
Meaning of constructing a building
A building can be several buildings that is constructed at the same time. This is intended to be used together with those buildings solely for a relevant residential purpose, as a combination of buildings may form a single dwelling.
A building is constructed when:
- it is built from scratch, and, before work starts, any pre-existing building is demolished completely to ground level (cellars, basements and the slab at ground level may be kept)
- the new building makes use of no more than a single facade (or a double facade on a corner site) of a pre-existing building, the pre-existing building is demolished completely (other than the retained facade) before work on the new building is started and the facade is kept as a condition, or requirement of statutory planning consent
- a semi-detached building is built
- an existing building is enlarged or extended, and the enlargement or extension creates an additional dwelling
Party walls
If a building needs to be demolished, you can ignore the retention of party walls forming part of a neighbouring property that is not being developed.
For example, you are constructing a building when you infill in a row of terraced houses if:
- the pre-existing house is demolished apart from the party walls shared with neighbouring properties
- any retained facade is kept as an explicit condition or requirement of statutory planning consent
Meaning of a dwelling
A building is a dwelling when each of the following conditions 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 for that dwelling and its construction or conversion has been carried out in accordance with that consent
A combination of buildings forming 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.
Enlargement and extensions that create a new dwelling
An enlargement of, or extension to an existing building, will qualify for the refund scheme when they contain an additional dwelling in its own right. The new dwelling must:
- be wholly within the enlargement or extension
- meet the conditions of a dwelling
For example, a new qualifying flat built on top of an existing building would be within the refund scheme. The conversion of a loft space into a flat would not.
VAT on goods
VAT is charged at the standard-rate on most building materials by suppliers. This will include goods imported from outside Great Britain (England, Scotland and Wales).
Contractors will charge VAT at the same rate as the services they supply. When constructing a new qualifying property their services will be zero rated. This means the supply of building materials installed by the contractor will also be zero rated.
Make sure that 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.
Goods you can or cannot claim for
The only goods you can claim for 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.
-
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.
-
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.
-
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.
-
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
- fixed amplification equipment in places of worship
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.
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 of the construction 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 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 construction
This means that qualifying goods are:
- incorporated in the building (or its site) before the construction 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 would 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
- fishponds, 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 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 using the following calculation:
Tax inclusive amount x (1 ÷ 6) = VAT at 20%.
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 that has been charged in error cannot be claimed from HMRC. When an error happens, such as when VAT is charged on work that should be zero-rated or reduced rated, your supplier must make the necessary adjustments.
Imported building materials
You can claim back VAT paid on importing building materials. When making your claim, you must give evidence of the VAT paid, together with the original shipping or transit documents showing the goods imported from abroad.
Making a claim
Documents needed for your claim
When making 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 that the construction 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 .
You must have a VAT invoice for all the eligible goods you claim for.
The goods must have been supplied to you and we may ask you to prove 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 the goods
- your name and address if the value is more than £250
- the price of each item showing the VAT treatment
Buildings 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 new build 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.
Buildings 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 building has been 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 VAT431NB 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.
Updates to this page
Published 5 December 2023Last updated 11 April 2024 + show all updates
-
A schedule of invoices template and information on using an agent when making a claim has been added.
-
'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.
-
First published.