VAT on new houses

A JONES • Jan 09, 2020

This is a big question but the simple answer is, you'd come out pretty much the same. New builds are VAT exempt, so at the end of the day, your new house should be VAT free but how you get there is different depending on how you purchase or build the house. Here are 6 options, 5 are to do with doing a self build.
01) Purchasing from a national house builder or a local/regional developer - The asking price advertised is vat free with no VAT to pay. What you can not do, and I'm often asked this, is after purchase add say a conservatory or build a patio and hope to reclaim this from HMRC. There is no opportunity to reclaim VAT on a house purchased as a finished product.
02) Self Build but using a main contractor - On this option, the price from the main contractor should be zero rated - no vat charged. If you go and do a little bit extra outside of your arrangement with your main contractor or maybe they do not want to get involved in purchasing, say your kitchen, you would then be able to submit a DIY VAT Reclaim under VAT431 for this purchase. If you employ another contractor to supply and fit the kitchen or you use, say Wren's supply and fit service, again, you would not pay the VAT, so again, there would be no VAT reclaim, although the option is there, but its for VAT reclaim, if you've not paid VAT, there is nothing to reclaim. Be careful about paying VAT in error here, remember, supply and fit on a new build is VAT free.
03) Self build but using a project manager and subbies -
04) Self build but being hands on yourself and subbies -
05) Self build, almost 100% yourself, except possibly a plumber and electrician -
06) Self build, with a mix of a main builder and subbies -