VAT is an important consideration in your self build project if you are doing the work and/or managing the subcontractors yourself. All new properties and barn conversions are currently ZERO rated for VAT (not exempt). If you organize your own self build you will need to contact your local Customs & Excise office and ask them for a SELF BUILD claim form.

This form will give you all the details of the items you can and cannot reclaim VAT on. It will also inform you that you can only make one claim! This can potentially make life difficult towards the end of your project if your finances are tight, i.e. - if your budget is £100,000 you would probably require £110,000 to complete the project and then reclaim the £10,000 VAT back at the end of the project.

Unfortunately most individuals do not have this luxury. What tends to happen is that you spend your budget of £100,000 that then includes £10,000 in VAT, after reclaiming this back you can complete your project but any item purchased after this point will not be eligible for a VAT refund.

If you used a large number of subcontractors that also supply their materials and are VAT registered you could ask them not to charge the VAT and write on the invoice "NEW WORK" this would help your cash flow but unfortunately not the subcontractors.

If you use a single contractor such as Falshaw Homes to oversee your build then this will have certain advantages over doing your own managing, mainly because they will be able to reclaim the VAT on many items that you could not as they are part of their normal running costs. They of course will not charge VAT on the completed dwelling and you would only have needed your original budget of £100,000 to see the project to completion.

Many individuals ask if they can reclaim the VAT on architectural and design fees. Unfortunately this is not possible.