Building a new home and VAT

The VAT DIY Housebuilders scheme is a special scheme that enables someone building their own home to benefit from special VAT rules that allow the qualifying construction costs of new homes and certain conversion works to be zero-rated. The scheme has been designed to effectively place DIY housebuilders in a similar VAT position to a property developer.

A claim can be made for qualifying building materials on which VAT has been charged. Qualifying materials include most materials incorporated into a new building or conversion which cannot be easily removed. There are exceptions including fitted furniture, carpets, and certain domestic appliances.

It is not possible to claim the VAT for any professional or supervisory services associated with the development. There are also time limits that should be adhered to when making a claim. A claim must usually be made within three months of the completion of the conversion or new building using the appropriate form. A repayment is usually made within 30 days of a claim being submitted.

There are two main forms for making a claim. The first form (VAT 431NB) is designed for new builds and the second form (VAT431C) is designed for qualifying conversions i.e., the conversion of a non-residential property to residential.