Self build query/advise

[Hobo]

A friend is shortly about to start building his new home as is expecting planning approval in the next couple of weeks. It consists of part refurbishment of a grade 2 listed home, with new extensions forming living area, swimming pool/gym, etc.

Land purchase circa 1m, budget for refurb is likely circa 1.5-2m.

My question is, as it’s not a new build and therefore would not be subject to zero vat, is it worthwhile doing the build through a SPV/limited company so that any VAT can be reclaimed, and also so the contract between owner and builder would be through two limited companies so bonds could be requested and legal routes in case of disputes are formalised.

[barryrs]

Wouldn't the eventual sale of the property attract VAT which could result in a bigger bill?

[MaxFromage]

If you live in a house held within a limited company, you will need to pay the company rent or pay a benefit in kind based on the market rent. Generally it's a non-starter.

Depending on other matters (residency/other assets etc) he may want to engage an accountant, but the vast majority of normal individuals will just build the property personally.

[Eric Mc]

Self Build VAT breaks are specifically aimed at individuals, not limited companies. What is the perceived advantage of trying to run this through a company?

[LooneyTunes]

Reduced rate VAT may be possible if it has been unoccupied for a qualifying period of time. It is a PITA to claim.

[Raj28]

If you mean he buys it in his personal name, then forms a separate Ltd Co, then builds it through said Ltd Co, Ltd Co would be able to reclaim VAT but would also have to charge him VAT for the service it is providing.

I am not an accountant.

[Hobo]

Eric Mc said:

Self Build VAT breaks are specifically aimed at individuals, not limited companies. What is the perceived advantage of trying to run this through a company?

Wasn’t aware of that, so based on this there is no advantage really, aside from potentially the dispute resolution side of company to company.

I’m assuming the part conversion, part new build would not cause issues.

Thank you greatly.

[Eric Mc]

HMRC has a whole section on their website devoted to Self Build homes. I would suggest you have a read of it.