The DIY housebuilders scheme lets a person who builds a new home, or converts a non residential building into a home, for themselves or their relatives reclaim the VAT they paid on building materials, and on a builder’s conversion work, through one claim to HMRC. For buildings completed on or after 5 December 2023, the claim must be made no more than six months after completion.

Why does the scheme exist?

Someone who buys a new house from a developer pays no VAT, because the first sale is zero rated. A self builder gets no such benefit on the materials they buy themselves. HMRC describes the scheme as putting the self builder in a similar position to buying a new house at the zero rate. It is a refund scheme under section 35 of the VAT Act 1994. Regulations 200 and 201 of the VAT Regulations 1995 set out how and when to claim (VCONST24100).

Who can claim?

For a new build, you need planning permission to:

  • construct a new dwelling to be used by you or your relatives as a family home, for residential or holiday purposes; or
  • buy a new building as a shell from a developer and fit it out to completion for the same use.

For a conversion, you can claim when converting a non residential building into a family home, when converting a derelict residential property that has not been lived in for 10 years or more before the work began, or when fitting out a converted shell. A non residential building is one never used as a dwelling, or not used as one in the 10 years before work starts; offices, barns, shops and redundant churches are the usual examples.

You cannot claim if:

  • a planning condition or agreement prevents the property being used or sold separately, which rules out most granny annexes; see VAT on annexes and extensions;
  • you intend to sell or let the property, or use it for any other business purpose, including a home built because you need to live where you work.

Working from home does not count as business use, and HMRC disregards a sale or letting soon after completion that results from a genuine change of circumstances such as a relationship breakdown (VCONST24350). A company building homes for staff cannot use the scheme.

What VAT can you reclaim?

On a new build, a VAT registered builder constructing a qualifying dwelling should zero rate their work and any building materials they supply with it, so there should be nothing to reclaim on their invoices. What you reclaim is the VAT on building materials you buy yourself. You can hand the materials to your builder to fit, provided the work is done before completion.

On a conversion, a builder can charge 5% for the conversion work, and that VAT can be included in the claim along with VAT on materials. See residential conversions for when the 5% rate applies.

Only VAT correctly charged can be reclaimed. If a builder charged 20% when the work should have been zero rated or 5%, HMRC will not refund it; the builder must correct the invoice. There is nothing to claim on supplies from someone who is not VAT registered. To work out VAT from a VAT inclusive price, HMRC uses one sixth for the 20% rate and one twenty first for the 5% rate.

What counts as building materials?

Goods qualify if they are incorporated in the building or its site during the work, are ordinarily incorporated by builders in that type of building, and are not excluded. HMRC lists as excluded:

  • fitted furniture other than fitted kitchen furniture;
  • most electrical and gas appliances, such as washing machines, fridges, doorbells and electric gates;
  • carpets, underlay and carpet tiles;
  • garden ornaments, sheds and greenhouses;
  • plant, tools and equipment, and consumables such as sandpaper;
  • the plot itself.

Appliances designed to heat space or water, to ventilate or purify air, burglar and fire alarms, and lifts are allowed. Basic wardrobes formed by the walls of the room with a single shelf and a rail can be claimed; modular wardrobes cannot. Outdoor leisure facilities such as tennis courts and swimming pools, and ornamental works such as fishponds, do not qualify; driveways, main paths, drainage and boundary walls do.

What is the deadline?

Regulation 201 of the VAT Regulations 1995, as amended from 5 December 2023, requires the claim no later than six months after completion. For buildings completed before that date the limit was three months. The six months run from the date on the completion certificate, or other evidence of completion you provide. HMRC treats a building as under construction until the local authority issues its completion certificate.

You get one claim only. If you cannot claim in time, write to HMRC explaining why; HMRC’s manual gives examples of reasonable excuse such as compassionate reasons, negligence of a professional adviser, or difficulty obtaining invoices or completion certificates (VCONST24550). Additional invoices can be sent for a claim not yet paid, or for a paid claim no later than four years after completion, quoting the claim reference. If you choose a completion date earlier than the certificate, you cannot make a second claim.

How do you make the claim?

Use HMRC’s online service, or form VAT431NB for new builds and VAT431C for conversions. You need:

  • the claim form (for postal claims) with a schedule of all invoices claimed;
  • your claim calculations;
  • evidence that the building is complete;
  • the planning permission: full permission, outline permission together with the later approval of the details reserved under it, or permitted development rights, together with any Section 106 agreement (Section 75 in Scotland);
  • plans of the building.

Building regulations approval is not planning permission. Do not send originals. Each VAT invoice must show the supplier’s name, address and VAT number, the date of issue, the quantity and description of goods, your name and address if the value is more than £250, and the price with its VAT treatment; see VAT invoice requirements. An agent can be authorised for one claim, but the refund is paid to the housebuilder.

HMRC aims to send a claim reference within two weeks for online claims and four weeks for postal ones, and to process the claim within three or six weeks of having everything it needs. If a claim is refused you can supply more information, ask for a review within 30 days of the decision letter, or appeal to the tribunal within 30 days.

What does a claim look like?

Illustration only. Jo builds a new detached house. The builder’s labour invoices are zero rated. Jo buys materials directly costing £96,000 plus £19,200 VAT. Of that, £3,000 plus £600 VAT is for carpets and £1,500 plus £300 VAT is for a garden shed, neither of which qualifies. The claim is £19,200 less £900, so £18,300, submitted within six months of the completion certificate.

What mistakes come up most often?

  • Paying 20% to a builder whose work should have been zero rated or reduced rated, then trying to reclaim it from HMRC.
  • Missing the six month deadline, or sending a partial claim and losing the right to a second one.
  • Invoices addressed to someone other than the claimant, or missing the date of issue.
  • Including appliances, carpets, tools or garden items.
  • Planning to let the property, or a planning condition that ties the new home to another building.
  • Living in a derelict house before work starts, which breaks the 10 year empty period for conversions; once work starts you may live there. For the shorter two year test that applies to builders’ charges, see renovating empty homes.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.