When buying or selling property as your main residence, VAT is not charged, as such sales are zero-rated. However, if you self-build, you don’t benefit from this zero-rating.
HMRC's DIY Housebuilders Scheme enables you to reclaim VAT on building materials and services, leveling the field regarding VAT.
What is the eligibility criteria for self builds?
You're eligible to claim for building materials if you have planning permission to:
- construct a new dwelling to be used as a family home for residential or holiday purposes, by either you or your relatives.
- convert a property from 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.
- In some cases, you may be able to reclaim VAT under this scheme If you're converting a structure that hasn't been residential for at least 10 years.
However, these points come with a common condition: if the property is intended for sale, rental, or other business purposes, it doesn’t qualify for VAT reclaim under this scheme. Additionally, the scheme doesn't cover extensions or annexes.
How to reclaim VAT for your self build?
Ensure you've been charged VAT, as no claim is possible on zero-rated items or purchases from non-VAT registered entities. To claim:
- Submit a VAT431NB form for new builds or VAT431C for conversions.
- Include the claim form, invoice schedule, claim calculations, construction completion evidence, planning permission, and building plans.
- Maintain all related financial records. HMRC will specify which invoices to send.
Smart Clerk simplifies VAT refunds by enabling you to upload, store, and manage invoices, and export data to Excel for form completion.
Required invoice information for invoice schedule:
- Invoice number
- Invoice date
- Description of claimed items
- Supplier's name and VAT number
- Total and VAT for eligible items
Processing time and deadlines
Online claims are typically acknowledged within two weeks (four weeks for postal claims). HMRC aims to process claims within three weeks after receiving all necessary information (six weeks for postal claims).
Submit your application within three months if the building was finished before 5 December 2023. If finished on or after this date, apply within six months.
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