Your dream build needn’t be a financial nightmare
There are probably relatively few of us brave enough to construct a home from scratch. After all, it takes a real sense of vision, commitment and dedication. Perhaps a slightly larger group of us might consider converting an existing building. In either scenario, however, costs are always an issue and can easily spiral.
It’s worth knowing that you may well be able to recover the VAT you’ve been charged on certain building materials and services. HMRC’s DIY Builders and Convertors VAT Refund Scheme covers new builds and non-residential conversions, where the property has been empty for a decade or more. Even if you intend to use the home for family holidays, it may be included in the scheme under certain conditions.
Things to remember
- You must obviously get planning permission for the work before commencing.
- Your contractors must apply the correct VAT rate to their services, as incorrectly charged VAT will be excluded from your refund claim. (Many services supplied in connection to a new build or conversion will qualify for 0% or 5% VAT.)
- You’ll be recovering VAT charged on work done to the fabric of the property, certain works within the grounds and on particular building materials. These might include fitted kitchen furniture, wooden flooring and solid fuel cookers.
- You won’t be able to claim for professional fees, the hiring of machinery or fitted furniture, such as carpets and some electrical appliances.
How to apply
You must submit applications to HMRC no later than three months after the completion date. There’s a fair bit of paperwork involved, as you need to answer questions and include schedules for each VAT rate charged.
You must also supply a range of original documents. As well as the original VAT invoices, you may need to send evidence the property had been empty for ten years prior to your conversion work. HMRC will also expect a copy of the planning permission, a full set of building plans and the completion certificate.
It’s advisable to get the support of your accountant from start to finish to ensure that the claim is accurate and complete.