The VAT DIY Housebuilders Scheme enables private individuals who build their own home or carry out the conversion of non-residential property to a residential dwelling for their family. The scheme will allow self-builders to recover VAT on the cost of certain goods and services. The DIY Housebuilders Scheme was introduced to ensure that private individuals who construct their own home are entitled to the same VAT relief that can be claimed by commercial housebuilders.
In general, new builds are zero rated for VAT purposes and conversions are liable to the reduced rate of 5% VAT. It is important for housebuilders to ensure that the building contractors are charging the correct VAT rate, as any incorrect VAT charged by the contractors will not be allowed to be claimed back from HMRC.
The application process is relatively straight forward. However, it needs a fair amount of consideration before the final submission to HMRC. As always with VAT related transactions, the rules are complicated and there is no option to re-apply or amend the application. So, it is vital to get the claim right first time! The application must include all eligible claims along with the supporting paper work to avoid the disappointment of a failed claim.
The VAT refund application must be submitted to HMRC VAT DIY Refund Team within 3 months of the completion of the building. This is usually when you receive the “Certificate of Completion” that will be issued by your local planning authority.
Are you thinking of building a family home? Or have you recently built your family home? We can assist with VAT reclaim!