- People building their own home, or converting a non-residential building into their home, can reclaim VAT on building materials from HMRC.
- You get one claim, and it must be made within six months of completion.
- VAT a contractor charged in error cannot be claimed. It has to be corrected by the contractor.
If you build your own home, or convert a non-residential building into one, you can reclaim the VAT on building materials from HMRC through the DIY housebuilders scheme. You make one claim, within six months of completion. The scheme will not refund VAT that a contractor charged when they should not have.
What the scheme does
You pay VAT on building materials as you go, and claim it back from HMRC once the home is finished.
"DIY" is misleading. You do not have to lay a brick yourself, and you can use contractors for some or all of the work.
The scheme covers people building a new home for themselves, and people converting a non-residential building such as a barn, chapel or office into their home. It is not for developers building to sell or let, and it is not for an extension or refurbishment of an existing house.
The two rules that catch people out
Six months. The claim must be made within six months of completion. The limit was three months before 5 December 2023.
One claim. You cannot claim in stages, and you cannot send a second claim for invoices you forgot.
The forms are VAT431NB for a new build and VAT431C for a conversion. The claim is yours to make. Keystone does not submit claims and does not act as agent with HMRC.
What the scheme will not refund
The claim is for building materials incorporated in the home. It does not cover professional fees, hire, or the excluded items such as carpets, most appliances and fitted furniture other than kitchens. Our guide to what stays at 20% covers those.
The expensive one is VAT charged in error. A VAT-registered contractor building a new dwelling should charge 0% on their work and on the materials they fit. If they add 20% instead, the scheme will not refund it.
As an example of scale only, on £300,000 of contractor's work wrongly invoiced at 20%, that is £60,000 of VAT the scheme will not give back. The remedy is a credit note and a corrected invoice from the contractor. That is a reasonable request of a builder who is still on site. It is a much harder one a year after they have left.
This is why the contractor's quote matters more than the claim form. If the rates are right at source, the VAT is never paid. If they are wrong, the scheme does not rescue you.
Where it goes wrong
- Whether the building qualifies for the scheme at all.
- A contractor's quote at 20% on work that should carry a lower rate.
- Items bought on the assumption that they are building materials, when they are not.
- A file started after completion, with the six months already running.
The sensible next step
Send us the builder's quote before you accept it, and we will tell you whether there is anything worth pursuing. Any fee is fixed and agreed first, and if the quote is right as it stands, including where the answer is 20%, we will say so. There is more for self-builders on our homeowners page.
Questions people ask
How long do I have to claim VAT back on a self build?
Six months from completion. The limit was three months before 5 December 2023. You can only make one claim, so it needs to be complete when it goes in.
Can I claim VAT back on labour for a self build?
On a new build there should be nothing to claim. A VAT-registered contractor building a new dwelling zero rates their work, so no VAT is charged on the labour in the first place. If 20% was charged in error, the scheme will not refund it.
Can I claim VAT back on architect's fees for a self build?
No. Architects', surveyors' and consultants' fees are standard rated at 20%. The DIY housebuilders scheme does not cover professional fees.