What can self builders do to incur less Value Added Tax (VAT) when building their dream home?

Are you a self builder or are thinking about building your dream home but are unsure about the VAT implications?

Or are you an architect who receives questions from your self builders about VAT?

In this short video Alan Davis, VAT Partner here at Henderson Loggie, shares with you some examples of what self builders can do to ensure their DIY claim is maximised.

Covered in this video:

► How the refund scheme works
► Examples of what can and can’t be claimed
► HMRC deadline for making the claim

If you have any VAT questions about your self build project, as a self builder or an architect, please contact Alan directly at alan.davis@hlca.co.uk.

Building a new home and VAT

If you’re one of those people who’s always dreamt of building their own dream home, but was never very sure whether you could afford to, especially if VAT at 20% was on top, then this short video will outline how you may be able to recover the VAT and get into your dream home.

One of the things I find when I’m speaking to people who are building their own dream homes is that they’re usually really well organised. And that means they keep great spreadsheets, they push builders along, but sometimes they find that they’re not so sure about the VAT aspects of their build.

I’m able to talk them through the process of making a reclaim for their DIY house build, and that includes what things can be claimed, what can’t be claimed, and the deadlines that HMRC set for making the claim.

What we’re about to share with you is some information of a general nature, and obviously your own circumstances will be bespoke to you. We would always recommend that you take your own professional advice to ensure that you’re making the right decisions, particular given the level of money involved in a house building project.

How to reclaim VAT on your building project

I’m often asked by clients who are building their own dream homes, and often their architects as well, about the VAT aspects of DIY house building. The important thing is to be organised, it wouldn’t be the first time that clients are scrabbling around in the mud, picking up invoices that have an element of VAT that they can recover on.

It’s about keeping them dry, keeping them safe, and getting them to the end of the project so you can make a nice neat claim to customs, and ensure that you get your full recovery of VAT that you’ve incurred.

How does the VAT reclaim scheme work?

So, how does a refund scheme work? Well, if you’re buying goods to incorporate in your new dream home, then you’ll inevitably be charged VAT by the merchant. That’s the sort of VAT that you’ll include on a DIY reclaim. However, if you’re using a builder, they’ll be able to zero rate their charge, and also the charge for any materials they use.

One of the things that you’ll always pay VAT on at 20% are professional fees, so things like architects and engineers will always charge you 20%, and unfortunately that can’t be included in the refund scheme.

What is the deadline for reclaiming VAT on your self build project?

One of the key features of the scheme is the deadline for making the claim. You get three months from the date of a practical completion certificate you’ll get from the local authority, and HMRC are fairly strict with that. So don’t fall foul of that.

That’s why it’s really important to ensure that you’re keeping records as you go along, so that in the end analysis you can make the claim as quickly as possible.

Any questions about saving VAT on your self build project?

So, if you’re in the middle of building your own dream home, or you’re thinking about it, or have any questions or comments about the VAT refund scheme, feel free to contact me directly at alan.davis@hlca.co.uk

The information is this video is of a general nature and seeks to highlight some of the issues which could be affecting you and/or your business, including changes to financial regulation and legislation. Viewers should not rely on this information without seeking professional advice on its application in their circumstances.