DIY House Builders and VAT

The VAT DIY House Builders scheme has been designed to allow a homeowner, building a home, to benefit from certain special VAT rules. The rules allow the qualifying construction costs of new homes and certain conversion works to be zero-rated and VAT repaid on certain qualifying construction costs. The following types of conversion are eligible to use the DIY House Builders scheme:

• The conversion of a previously non-residential property into a dwelling to be used either by the homeowner or their relatives as a family home for residential or holiday purposes.
• The conversion of a previously residential property for either the homeowner or their relatives, that has not been lived in for the last 10 years or more, into a family home for residential or holiday purposes.
• The purchase of a converted building as a 'shell' from a developer which has been fitted out to completion, for either the homeowner or their relatives as a family home for residential or holiday purposes.
• The conversion of a building into one that is intended solely for a Relevant Residential Purpose.

Business related claims will likely be rejected by HMRC. These may include:

• Claims by a speculative developer
• Claims by a landlord
• Claims by homeowners running a bed and breakfast business
• Claims by homeowners running a fee-paying care home
• Claims by a membership club or an association
• Claims by homeowners running a fee-paying school.

Homeowners who work from a home office are usually eligible to make a claim.

Disclaimer – Please note: The ideas shared with you in this article are intended to inform rather than advise. Taxpayers’ circumstances do vary and if you feel that tax strategies we have outlined may be beneficial it is important that you contact us before implementation. If you do or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

 

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