Our Guide to Claiming Back VAT on a Self Build Project

Self-builds are zero rated for VAT. Mike Hardwick explains what you'll be able to claim, and how to claim it
Build It expert Mike Hardwick
by Mike Hardwick
9th May 2020

When you buy a house on the open market, you don’t have to pay VAT, whether it is a new home or has been previously occupied. So when you self build your own home, the same principle applies under guidance known as VAT Notice 431 NB (‘NB’ as in ‘new build’).

Whether you’re starting from scratch with a new build home or converting another type of property into a residential dwelling, labour is essentially zero rated for VAT. You will also be able to claim back some or all of the VAT on the materials element of the build.

However, there are exceptions to this rule, and you need to be clear about what can and cannot be claimed for. There are some common misconceptions about VAT reclaims, which can result in disappointment when expected savings don’t actually materialise.

I’m giving you the lowdown on how VAT applies to self build projects, and how to go about claiming back the cash that you are entitled to.

VAT Notice 431 NB for Self Build Projects

VAT Notice 431 NB is the scheme that covers VAT reclaim on new build properties in the UK (this includes the Isle of Man, but not the Channel Islands). The premise of self build VAT reclaim is that you are building your principle private residence. You can’t claim the VAT back if you plan to use the property for a business purpose.

So if you are building to sell for a profit, let it out or run a bed and breakfast, then you won’t be allowed to reclaim VAT. Don’t worry if you intend to work from home, though: using one room as an office is considered acceptable by the taxman.

VAT Refunds for Conversion Projects

Conversions of non-residential properties − structures that have never been lived in or uninhabited for 10+ years − are covered by another scheme, VAT Notice 431 C .

It’s basically the same process as with new builds, but there are differences in the way VAT can be reclaimed against labour for a conversion (and the amount).

For example, builders will charge you VAT at 5% on labour-only or supply-and-fit contracts. You can reclaim this, along with the 20% on materials, at the end of the project.

Interestingly, you can also make a VAT reclaim if you buy the shell of a new property from a developer and then complete the fitting out yourself or through another builder. I suspect that this option will become more popular as the concept of custom building takes hold.

It’s worth having a look at the HMRC website, which has links to the forms you will need as well as helpful supporting notes.

Claiming back VAT on extensions & renovations

Any work you undertake on an already completed building will not be covered by the zero-rated VAT scheme. This includes projects such as refurbishment, adding an extension, converting the loft or constructing a granny annex or new garage. All of these will attract VAT at 20% on materials and labour − even though they are ‘new build’ additions to the property.

There are some exceptions, though. To make the refurbishment of properties in run-down areas more economically attractive, the government introduced a reduced rate of 5% VAT for houses that have been unoccupied for two or more years.

This rate applies to all labour and materials used on a renovation project, but it cannot be reclaimed – it is up to your builder to invoice you correctly. The best way of proving whether a house has been unoccupied is by checking council tax payments or utility bills.

VAT rules for listed buildings

The rules have changed for listed buildings, too. VAT on approved alterations used to be reclaimable, but as from October 2012, all repairs, alterations and extensions on listed buildings are liable to VAT at the full 20% rate.

However, there are exceptions here, too, in that if you obtain permission to demolish all but the facade or shell of a listed building, then the construction work could be classified as a new build and the VAT element might be eligible for reclaim. It’s a tricky area with some fairly strict definitions of what is and isn’t allowed, so it’s best to check with HMRC before you start work.

What can you claim for under the VAT 431 scheme?

Labour on a new-build property is always zero rated, so it should never be charged, regardless of whether the builders or tradesmen you use are VAT registered or not. When it comes to the materials incorporated into the build, you need to claim the VAT back afterwards.

Conversions are slightly different and in some cases, VAT is charged on labour but at the reduced rate of 5%. This is the main reason for having different claim forms for new build (431 NB) and conversions (431 C).

A common misconception is that all VAT on a self build project can be reclaimed. This is not so − the VAT due on professional or supervisory services (like surveys, design and planning, and tool and plant hire) is not exempted.

The HMRC website notes show what can and can’t be claimed for, but the list of exemptions is extensive and not entirely logical, so I’ve produced a list (found at the end of this article) showing what can and can’t be reclaimed.

This is not exhaustive, so if in doubt, either call HMRC’s VAT DIY helpline for advice, or just include it in your submission anyway. The worst that can happen is that someone puts a line through the item and it gets rejected.

How do I reclaim VAT on my self build?

Before you start the build, download the relevant pack from HMRC’s website and then collate all of the receipts and invoices for the materials you will be claiming for as you go along.

It is important that these are all original documents, have the supplier’s VAT registration number, plus list the quantity and description of the goods and the price of each item. If the value of an invoice is more than £100, then it must show your name and address.

Anyone who buys eligible goods for your project can make the claim. Your builders can do some or all of the reclaim for you and simply not pass the VAT charge on to you at all, which can really help your cash flow.

However, it is frequently the case that you will have bought considerable quantities of materials yourself and will therefore want to make your own submission. Claims are always made at the end of the project – usually after your building control officer has issued the completion certificate.

There are other documents that can be used to prove completion, such as a certificate of habitation. Another option is to obtain a letter from your bank or building society confirming that the last element of any finance package has been released because they consider the house complete.

You then have three months to submit your claim, which HMRC will acknowledge within 10 days and will usually settle within 30 working days.

VAT when buying materials from overseas

If you have bought items from within the EU, you can claim at the rate paid, converted into sterling. If you have imported building materials into the country from outside the EU, then you will need to provide evidence of the VAT paid, together with the original shipping or transit documents.

Learn more: Can we reclaim VAT after Brexit?

Correcting VAT errors

If you find you have been charged VAT in error (by paying for VAT on labour on a new build project, for example) then you won’t be able to claim that erroneous payment back from HMRC. This is because the money will not have gone to them. As no VAT was due, it will have gone straight to your builder.

Your only recourse will be to go back to the builder and challenge the price he has charged. There will be a grace period allowed with HMRC to enabler genuine mistakes to be adjusted against the builder’s VAT account. This is time limited, however, so if you suspect an error, act quickly.

New Homes and VAT: What you can and can’t claim money back for

Items that can be claimed for include:

  • Building materials, such as bricks, timber, tiles and cement
  • Air conditioning systems, dust extractors and built-in vacuum cleaners
  • Builders’ hardware, such as door furniture and rainwater goods
  • Joinery items, such as windows, doors and stairs
  • Glass and double glazed units
  • Bathroom accessories (towel rails, soap dishes etc)
  • Decorating materials (wallpaper, paint etc)
  • Gas or electrical systems designed to heat space or water (includes Agas and solid-fuel cookers if designed to provide heating)
  • Gas or electrical systems designed to provide ventilation, cooling, purification or dust extraction
  • Central controls for lighting, heating & ventilation (but not the remotes, touchscreen interfaces etc)
  • Lifts and hoists
  • Light fittings (including chandeliers and outside lights)
  • Aerials and satellite dishes
  • Burglar alarms, fire alarms and smoke detectors
  • Curtain poles and rails
  • Fixed kitchen sinks, cupboards and worktops
  • Fixed floor coverings such as engineered wood and ceramic tiles
  • Permanent boundary fencing
  • Materials for installing services like water, gas and electricity
  • Plumbing and electrical installations including central heating, fixed heaters, fires and fireplaces, solar panels, bathrooms and showers
  • Saunas and swimming pools (if located inside the building)
  • Turf, plants and trees as detailed on an approved planning permission

Items that cannot be claimed for include:

  • Domestic electric and gas appliances, such as ovens, fridges, microwaves, coffee makers and dishwashers etc, whether built-in or freestanding
  • Lampshades and ornamental light fittings
  • Electrically operated garage doors (or door locks) and gates
  • Curtains and blinds
  • Carpets, underlay and carpet tiles
  • Audio equipment, built-in speakers, CCTV, TV receivers etc
  • Consumables (sandpaper, white spirit etc)
  • Bedroom furniture, bathroom furniture (ie vanity units), mirrors
  • Garden furniture, ornaments and sheds

Main image: The Glosters were able to claim back £22,000 in VAT following their oak frame and SIPs build


  1. Dave Stevenson says:

    You say that “intelligent lighting systems” are excluded from VAT reclaim, are you sure about that? The HMRC VAT reclaim notes include “central controls (to the extent that these relate to light, heat or ventilation)” as “articles incorporated into the building” and therefore allowable. Does this not cover “intelligent lighting systems” ?

  2. Chris says:

    Hi Dave,

    You are correct that central controls for lighting, heating & ventilation are now included as part of the zero-rated VAT scheme. The interfaces – touchscreens, remote controls etc – remain ineligible for zero-rating.

    We’ve updated the article accordingly – thanks for bringing it to our attention.

    Best wishes,


  3. MAUREEN moreton-evans says:

    does the cost of the build include the price of the land or not, and how long after building can you sell (if needed) to still be able to reclaim vat

  4. Jo Whiley says:

    Could I ask a question regarding VAT. We have planning permission to build in our existing horse riding/stable yard business. The house permission was granted with the condition that it is solely for purposes for the business. This will be our family home so that our business can continue. My question is will our self build still be zero VAT. The business itself is not VAT registered.
    I hope that makes sense!

  5. sam paxton says:

    Hi Jo,

    did you get your VAT back, I’m having a nightmare trying to reclaim it

  6. Ellie Vaughan says:

    One of our clients fits blinds and his customer has queried the VAT on his quote. The self build is complete so just wanting to clarify that he is still fine to charge VAT as normal, as he is fitting made to measure blinds on a finished house. Or will he only charge Zero Rate VAT on the labour of fitting?

  7. Mark Rigby says:

    I am just starting the actual build. We are now excavating the sloping site. Can we reclaim the VAT on the removal of earth off site

  8. Chris says:

    Hi Ellie,

    Fitting manual blinds does come under the scope of the new build VAT reclaim, so the work could be eligible. However, you’ve hit on something of a grey area here, as the issuing of a completion certificate for Building Regs doesn’t necessarily equate to works on the project no longer being eligible for zero-rated VAT. But it might.

    In HMRC’s eyes it’s all about whether the works in question could be reasonably classed as being ‘in the course of construction’ as per paragraph 3.3.2 of VAT Notice 708: https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#para3-3

    If the blinds were in the original building spec then that could well indicate they qualify, for instance, even if there has been a delay between the main works finishing and the blinds being installed.

    Of course, if the client has already made their VAT reclaim (which needs to be done within 3 months of receiving the completion certificate anyway) then this all becomes a bit moot. They can only claim once, so after that point you’d have to treat the rest of the works as though it were an existing building for VAT purposes.

    Sorry I can’t be more definitive… but hopefully this helps a bit!

    Chris (editor, Build It)

  9. Simon Dormon says:

    Hi Chris

    Thanks for your piece – very informative but can I ask about the supply of joinery more generally:

    We have been asked by a client to zero rate built-in shelving and cupboards – some of which are to house MVHR units. I think these can be be zero rated but not (for example) library shelving or cupboards generally?

    As HMRC can come along years later and insist we pay the VAT (it happened once!) it would like to clarify the current situation. Also does the zero rating apply to the whole invoice – i.e. labour and materials?


    • Kathy Tisdale says:

      Hi Simon,

      HMRC issue the VAT Notice Buildings and Construction 708, which can be downloaded from https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708 and is very comprehensive.

      I would not advise that you print the whole of the document at this stage as it’s a large document and some of the information would not be relevant in this instance, but Section 3 on ‘Zero rating the construction of new buildings’ will guide you as to what rate to charge.

      You can also ask that the clients issue you with a VAT certificate which will protect you from any potential VAT payment should you have an inspection in the future. If you obtain the certificate, store it with the client’s invoices for ease of checking.

      Kathy Tisdale (Build It VAT Reclaims expert)

  10. Barry Clark says:

    Do you have to inform HMRC before commencing a self build?

    We are relaplacing an existing dwelling with a new self build and also building a separate annexe with full planning permission to live in whilst building the new dwelling. The annexe will remain as ancillary to the main residence . Can we claim the VAT back on the annexe as well as the main house.

  11. Malc Hall says:

    My wife and I are self building our for ever home in our mid 60s, so rather a stressful time to come.
    The plans have been agreed by the council which has taken 13 months.
    The original bungalow will be knocked down and the new footings will be laid, ready for the build of the new dwelling.
    My question is, the company that will be demolitioning are willing to not be charging us vat on labour nor the materials they purchase, as they can claim the vat back themselves, but how can I be sure they are not charging me vat, while claiming the vat themselves, other than asking to see the invoices for the materials?

    • Kathy Tisdale says:

      Hi Malc,

      The construction of a new home that is going to be your main residence is zero-rated for VAT. Therefore, the company that you are going to appoint to carry out the demolition of the old property and associated works must zero-rate their work and not charge VAT on any labour nor the supply of materials.

      So, there shouldn’t be a need to ask the company to see the invoices from their suppliers, and don’t be surprised if they refuse your request to do so. Instead, double check that the quotation for the works they have given you states that VAT will be charged at 0%. Also ensure that you receive a VAT invoice showing the works carried out and materials supplied have been zero-rated in order to ensure you are being charged the correct rate of VAT. This invoice should also be dated, show their VAT number and the company’s full details, such as their name, address and contact information.

      Kathy Tisdale (Build It’s VAT reclaims expert)

  12. Dee Cooke says:

    Hi, We are in the process of building and have a builder for the shell and we are going to fit internals such as kitchen, bathrooms and flooring etc. The builder is not charging us VAT and will reclaim once they have finished. I see the HMRC state only one VAT claim can be made, does that mean we won’t be able to make a claim for the materials we buy e.g. kitchen units or are will still able to make a ‘Self Builders’ claim independently of the builder? Thanks

    • Kathy Tisdale says:

      Hi Dee,

      The builder is correct in charging VAT at zero rate if you are building your new home and it is not a conversion. Your builders are able to reclaim the VAT on purchases being used in your new home through their accounting and HMRC’s VAT system. So, they take the financial costs until they make a reclaim through their accounts.

      Although you have instructed the builders to carry out the works on your behalf, you are still the self builders. HMRC’s DIY VAT team process claims under the DIY VAT Homebuilders Scheme, which is independent to your builder, while also enabling individuals to make their own VAT reclaim for materials used to build new home. You can only make one claim at the end of your build once you obtain the completion certificate from your local council’s building control department or alternatively an independent company offering these services.

      Kathy Tisdale (Build It’s VAT reclaims expert)

  13. Joe Campbel says:

    Hi Kathy,

    I am trying to determine whether our project will be eligible for VAT refund as a ‘new build’.

    Our planning if is for remodelling of an old bungalow, however when we build almost everything aside from one wall will be knocked flat and rebuilt – due to cracked walls and dodgy foundations.

    A developer friend advised that due to only one wall being retained and used in the new construction it will constitute a new build and be eligible for the VAT refund.

    Do you know if this is the case?

    Many thanks for any advice you can provide on this.


    • Kathy Tisdale says:

      Hi Joe,

      To answer your question, it would be useful to have more information. It would be beneficial to know if you have just purchased the property, if so, has it been empty for any length of time or whether you had been living in the bungalow. It is unclear as to whether you have started the works.

      The problem is that your planning consent states remodelling of an old bungalow and therefore you do not meet the legal side of the HMRC DIY VAT Homebuilders Scheme as your planning is not for a new build. HMRC state that a new build can be built on the slab and therefore the footprint of a pre-existing building, can have one notable wall or if on a corner plot then two adjoining walls usually stipulated by the planning department as they consider the property’s facade worthy of being preserved.

      HMRC state that they look at each claim on an individual basis, so if you have already started or have completed the works, I would submit a claim and back it up with further evidence. You could also approach the local planning department/building control and ask very very nicely if they can issue you with a letter that you can use as evidence, stating that, due to the dilapidated state of the property, the works carried out constitute to it being a new build.

      If the planning office do not supply you with any information in your favour, you could submit your claim with photographic evidence showing the site during the works, especially the one wall standing,
      If you have not yet started on the works, I would suggest you go back to planning and resubmit a planning application for a new build. You may need a report from a structural engineer stating that the current building is not fit for purpose in support of your planning application.

      Best of luck with your project,

      Kathy Tisdale (Build It’s VAT reclaims expert)

  14. Ian Rivett says:

    We are looking at purchasing an ex police house to knock down and put a new build on the plot. This property purchase going to include vat at 20%. Can we reclaim this along with any other vat at the end of the build?

  15. Chris Hunt says:


    Are there any differences between, Approved Permitted Development and Approved full development? I was told that Permitted development for a barn conversion is still subject to 5% vat on labour and materials. Where approved full planning permission for essentially a new build and not a conversion is labour and materials at 0% VAT… is this correct?

    We are weighing up the options (if we gain approved permitted development) whether then to apply for full planning to build as a ‘new build’ rather than a conversion. If there are any VAT benefits it would be good to get clarification

    Thanks, Chris

  16. Sam Regina says:

    Hi there

    Can you please help me with this… The question relates to a reduced rate of VAT (5%) in instances with the property was unoccupied for 2+ years.

    We purchased the house after probate. I believe it may have been unoccupied for the prescribed period of 2 years. As the house sits on greenbelt, we had to go through a series of planning applications which have taken us around 1.5 years to obtain.

    1. Are we eligible for the reduced rate of 5% (due to it being vacant prior to purchase) OR does this not apply to us as we have been living in the property during the period of the planning applications? The property is in Loughton, Essex, IG10.

    Assuming we don’t qualify for the above…..
    2. We have consent to substantially extend an existing house which will involve rebricking the entire house (taking down the existing outer skin/brickwork the replacing with new). Will this qualify as “new build” and therefore 0% vat? The planning consent is for “extensions” (not “new build”).

    Thank you in advance for your assistance.

    • Kathy Tisdale says:

      Carrying out work to an existing building will typically incur a VAT fee at the standard rate of 20%. However, you may be able to pay VAT at the reduced rate of 5% if you’re renovating or altering an eligible dwelling, as long as it has not been lived in during the two years immediately before your work starts. So, if the qualifying residential premises have not been lived in during the two years immediately before your work starts, all of your work is reduced-rated.

      However, there are some exceptions to the rule for people who are living in the premises while refurbishment work is being carried out. In order to qualify for the reduced rate of 5% while living in the property, you must move in on a day after the works begin.

      If you’re living in the premises before the work begins, or anyone else has lived in them during the previous two years before you start the work, you will be subject to the standard 20% rate for VAT. So, as you have already been living in the house prior to any works being started, you unfortunately would not be eligible for the reduced VAT rate.

      As to whether or not your project meets the criteria for zero-rated VAT, your planning permission will need to be for a new build in order to qualify. So, as the permission granted states that it’s for an extension, you would not be entitled to have any works invoiced at the 0% VAT rate.

      If you were to qualify for the reduced VAT rate of 5%, you would need to ensure you engage VAT registered trades to complete the building work, so that they can invoice you at the reduced rate, and you must also provide them with proof that the property was vacant for over two years prior to any work carried out.

      If you plan to carry out any of the work yourselves and purchase materials to do so, you have to pay the standard VAT rate of 20% from your suppliers and no part of this can be reclaimed on your side.

      Best of luck with your project,

      Kathy Tisdale (Build It’s VAT reclaims expert)

  17. LISA TATE says:

    I am so pleased I have come across this site as it is very informative thank you.
    I have a question please, we are supplying and fitting joinery items on a new build project that is zero rated for VAT.
    Do we charge VAT on our Site Surveys & Drawings at Standard Rate VAT?
    Also, we are supplying and fixing joinery items, i.e. Utility Room Cupboards, Built in storage cupboards, Built in Wardrobes, shelving units. These items will be incorporated in the building and would need tools to remove them. Would these items all be zero rated?
    I want to make sure I invoice correctly so that there are no come backs from HMRC regarding incorrect VAT charges.
    Thank you for your assistance in this matter.

  18. Stuart Neal says:

    Please could you help me with how I can claim vat back on our semi-detached project

    My Sister and I are self building a pair of semi-detached houses (labeled Plot A and Plot B, each with its own completion certificate)

    I will be building and paying for the materials to make the complete shell watertight and will be moving in way before my sister completes and finishes her side

    Will I be able to claim the VAT back for the materials I’ve brought to make the complete shell watertight, plus the internal materials brought for my side (Plot A) when I’ve finished and received the completion certificate for it
    My sister would then claim for the materials for ‘fitting out’ her side when she’s finished and receives her completion certificate for hers (Plot B) at a later date


    could I make a claim for the complete shell and Plot A internals with my completion certificate. Then at later date, place a new VAT claim for internals of Plot B when its finished and have received its completion certificate, as I’m building it for a relative who intends to live there
    This would just mean I could buy the all materials and save my sister setting up her own merchant accounts for her side

    Many Thanks


  19. Christopher Hallett says:

    Can someone clarify matters regarding 5% on renovating properties empty for 2yrs plus.
    I know you can employer a VAT registered builder and pay at 5%. However, I’ve been told and Gov.uk website seems to suggest that you can do jobs DIY and re-claim the VAT or 15% of it by submitting receipts for materials bought eg plasterboard etc even from a builders merchant. Is this correct?

    What evidence do you need to prove property been empty? Electoral role not up to date and cannot get council tax info for those years. Will solicitor letter suffice supported by evidence owner was in care home and also can get neighbours to sign affidavit?

  20. Erika Chaffey says:

    Hi Christopher,

    Thanks so much for you question. For carrying out a renovation on a property not lived in for 2+ years you will get a reduction in the VAT from the standard rate of 20% down to 5% by any VAT registered trade carrying out any of the works. You will need to provide evidence by way of a letter or notice which you should be able to get from the Empty Home Officer at your local council or the local rating office.

    Unfortunately, you cannot reclaim the 5% charged nor can you reclaim any VAT charged by builders’ merchants.

    If a property has been unlived in for 10+ years then this is classed as a conversion by HMRC and the 5% vat rate is incurred which can be claimed back via the Self build VAT Reclaim scheme.

    Kathy Tisdale, (Build It’s VAT Reclaims expert)

  21. Erika Chaffey says:

    Hi Chris,

    Thanks so much for your question. If your planning states that the building works are a conversion and therefore a change of use then the VAT used by VAT registered trades should be 5%. Note that HMRC cannot refund incorrectly charged VAT. Where your project is to build a new home for you or a family member to live in and your planning states it a new build then the Vat rate for trade to charge is Zero% VAT. So yes, you are correct.

    A talk with the local parish council and local planning office will give you an indication as to whether they would entertain a new build on the site depending on their policy of new homes in the country-side. Once you have this information it will determine the type of build allowed on the site.

    Kathy Tisdale (Build It’s VAT Reclaims expert)

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