VAT on a self build
Discussion
having got over the excitement of finally getting planning permission allowing me to demolish my house and build a new one on the site I'm now thinking about the likely budget requirements.
my understanding is I'm able to claim back the VAT in relation to the new build.
does this relate to all VAT including materials and labour costs?
and what about the VAT on professional advisors and consultant fees?
I know I could probably look this up online or ask my accountant but I was guessing there are probably some switched on people here that have already done a self-build that may know the answers.
my understanding is I'm able to claim back the VAT in relation to the new build.
does this relate to all VAT including materials and labour costs?
and what about the VAT on professional advisors and consultant fees?
I know I could probably look this up online or ask my accountant but I was guessing there are probably some switched on people here that have already done a self-build that may know the answers.
Not professional fees.
Basically the build and labour is VAT free. Everything else like scaffolding and hired diggers, fitted bedrooms, carpets and suchlike are not.
Just to add - fitted kitchen units are VAT free, all the appliances are not.
Basically the build and labour is VAT free. Everything else like scaffolding and hired diggers, fitted bedrooms, carpets and suchlike are not.
Just to add - fitted kitchen units are VAT free, all the appliances are not.
Edited by Arrivalist on Wednesday 5th August 15:15
Professional fees etc are not eligible for VAT reclaim.
If you have people doing supply and fit/build, they should be able to zero rate the VAT. We work different up here, our contractors did this usually with a note of our building warrant reference for their records. Not sure what you would need to provide down south.
Anything where you are buying the materials, you’ll need to pay the VAT and reclaim at the end once it’s been signed off. Would really help if there were defined stages where you could submit claims to help with cash flow later in the build but that would require a degree of pragmatism not likely to appear in any level of government.
There are some oddities like Arrivalist pointed out. Another example would be laminate floor can have the VAT reclaimed but carpets can’t, because the laminate would be part of the building’s fabric but a carpet is classed as soft furnishing.
If you have people doing supply and fit/build, they should be able to zero rate the VAT. We work different up here, our contractors did this usually with a note of our building warrant reference for their records. Not sure what you would need to provide down south.
Anything where you are buying the materials, you’ll need to pay the VAT and reclaim at the end once it’s been signed off. Would really help if there were defined stages where you could submit claims to help with cash flow later in the build but that would require a degree of pragmatism not likely to appear in any level of government.
There are some oddities like Arrivalist pointed out. Another example would be laminate floor can have the VAT reclaimed but carpets can’t, because the laminate would be part of the building’s fabric but a carpet is classed as soft furnishing.
Three things to do:
1) Keep a complete file of all invoices/receipts AND a spreadsheet.
Do this as you go as it ll make the reclaim process simpler.
Check the HMRC site for the official reclaim from to make sure that your spreadsheet captures all of the info you need.
2) Make sure that any suppliers/installers that should be charging you a lower rate of VAT than the standard 20% (heating being one that springs to mind) do so from the outset.
If they charge you 20% instead of 0 or 5 then HMRC won t refund you re 20% they ll insist you get an invoice with the correct % on it.
Aside from goodwill, there s nothing in it for your installers to go through the hassle of correcting the original invoice, etc.
3) If you get asked to pay upfront against proforma invoices, make sure you get proper finalised VAT invoices from the supplier when goods are delivered.
I reckon that not knowing those things at the the start of my first self-build probably cost me a 5-figure sum in VAT that it proved too difficult/impossible to reclaim.
Other tips:
Use AI heavily. Claude is great at QS work to sense check quantities etc.
Open accounts with two builders merchants *and* then price check them online. They will compete against each other and often get close to online prices.
If you resist their suggestion to get credit accounts set up and instead use a cash account then you can pay as you go on your credit card. A self-build, paid for on a credit card with a decent limit, will get you an amount of air miles / cash back that is worth having.
Don t get caught out by build sequencing. Kitchens and bathrooms may be the last thing to go in, but the plumbing (especially the waste) for them isn t design them early so you re not in a rush.
It is massively stressful, but strangely addictive, especially if you manage it yourself.
If you *don t* self manage, figure out how you get interests aligned: 3rd party management on a cost plus basis does not do this.
ETA: consider buying second hand plant and then selling it later. Doesn’t take long before the hire charges of excavators etc really start to mount up.
1) Keep a complete file of all invoices/receipts AND a spreadsheet.
Do this as you go as it ll make the reclaim process simpler.
Check the HMRC site for the official reclaim from to make sure that your spreadsheet captures all of the info you need.
2) Make sure that any suppliers/installers that should be charging you a lower rate of VAT than the standard 20% (heating being one that springs to mind) do so from the outset.
If they charge you 20% instead of 0 or 5 then HMRC won t refund you re 20% they ll insist you get an invoice with the correct % on it.
Aside from goodwill, there s nothing in it for your installers to go through the hassle of correcting the original invoice, etc.
3) If you get asked to pay upfront against proforma invoices, make sure you get proper finalised VAT invoices from the supplier when goods are delivered.
I reckon that not knowing those things at the the start of my first self-build probably cost me a 5-figure sum in VAT that it proved too difficult/impossible to reclaim.
Other tips:
Use AI heavily. Claude is great at QS work to sense check quantities etc.
Open accounts with two builders merchants *and* then price check them online. They will compete against each other and often get close to online prices.
If you resist their suggestion to get credit accounts set up and instead use a cash account then you can pay as you go on your credit card. A self-build, paid for on a credit card with a decent limit, will get you an amount of air miles / cash back that is worth having.
Don t get caught out by build sequencing. Kitchens and bathrooms may be the last thing to go in, but the plumbing (especially the waste) for them isn t design them early so you re not in a rush.
It is massively stressful, but strangely addictive, especially if you manage it yourself.
If you *don t* self manage, figure out how you get interests aligned: 3rd party management on a cost plus basis does not do this.
ETA: consider buying second hand plant and then selling it later. Doesn’t take long before the hire charges of excavators etc really start to mount up.
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