NEW BUILD VAT RECLAIM: How does VAT work on new builds in UK?
You can apply for a VAT refund on the building materials and construction services if you are:
- Building a new home.
- Converting a property into a domestic home.
- Constructing a property for a charity.
- Building a non-profit communal residence (e.g. a hospice).
This guide explains how to claim a VAT refund and which form you need for the application process.
As a rule, the building work and construction materials must meet all the qualifications to claim VAT. You must also apply within three (3) months of finishing the project to HM Revenue and Customs.
Note: The rules for building a new home and VAT differ in some ways to the rules on VAT for builders working in the construction industry.
VAT Eligibility for a New Build Home
Further guidance notes are available on application form 431NB and 431C. They both clarify what types of new building projects and materials qualify for a VAT refund (see below).
VAT on New Homes
As a rule, to qualify for a VAT refund on new build or self build properties, it should:
- Be a separate and self-contained construction.
- Be a construction for you or your family to live in (or for holidays).
- Not operate as business premises (one room can be a work from home office).
Most builders are zero-rated for Value Added Tax when they are working on new buildings. That means you are unlikely to pay any VAT for their services.
VAT on Property Conversions
As a rule, a converted building must be a non-residential property. A residential building qualifies if it has been vacant for at least ten (10) years. That means you can claim a refund for work carried out by builders on a conversion from a non-residential building to a home.
Note: Builders usually charge a reduced VAT rate for other types of property conversion.
VAT on Communal and Charity Buildings
A VAT refund would usually apply if the construction is for:
- A non-business purpose (you are not charging a fee for using the building).
- A charitable purpose (e.g. a hospice).
- Residential use (e.g. for a children’s home).
Building Materials and VAT
There are specific rules when you claim a VAT refund for building materials. The materials must be ‘incorporated’ into the construction. That generally means removing them would cause damage to the property. In general you should not be able to remove the materials without needing special tools to do so.
A VAT Refund is Not Available for:
- Building projects constructed in the Channel Islands.
- Zero-rated goods or exempt materials or services that do not have a VAT content.
- Your professional costs or supervisory fees (e.g. architect or surveyor).
- The hire of machinery or equipment.
- A building used for a business purpose.
- A building if you cannot sell it or use it separate to another property (e.g. because of a planning permission condition).
- Construction materials that are not ‘permanently’ attached to, or part of, the building itself.
- Fitted furniture or carpets, certain gas or electrical appliances, and garden ornaments.
Reclaim Form VAT431NB and VAT431C
There are two different forms to use when building a new home for VAT reclaims. Use form VAT431NB to claim a refund on a new build. The other form VAT431C is for claiming a refund on a property conversion. Fill in the most relevant most form and send it to:
National DIY Team SO970
HM Revenue and Customs
Telephone: 0300 200 3700
Note: You have 3 months to claim once the building work is complete. You should get the refund within one (1) month of sending in the claim.
Documents to Include with a Claim
Remember to include these details when you send in your claim form:
- Your bank information to receive the refund.
- Planning permission for the building project with a full set of building plans.
- Proof that the construction work got completed (e.g. local authority letter).
- Invoices, tenders, or itemised estimations.
- Bills of sale and any relevant credit notes.
All valid VAT invoices must show the correct rate to get them accepted. You must convert any invoice amounts into Sterling if they are in a different currency. Contact the VAT Helpline for further information or advice.