In a continued effort to digitise taxpayer interactions, HMRC’s latest re-jig sees self-build DIY claims move online. While the traditional paper format is still available, this move is hoped to speed up VAT claims and minimise errors made in the application stage.
DIY VAT Submissions: What’s New?
Under the VAT homebuilders’ scheme, those who build their own homes or complete part of the building project themselves have always been entitled to reclaim the VAT paid on building materials. This scheme was introduced to level the playing field between those who construct their own homes and those who buy new ones; however, long delays and administrative mistakes have lessened the appeal of this tax incentive. The move online aims to make it easier for homebuilders to reclaim the VAT they are owed.
How Do VAT Submissions For DIY House Builds Work?
If you buy a new house from a developer, you do not pay VAT. Therefore, to put self-builders in the same position, HMRC’s VAT homebuilders scheme allows the VAT paid on constructing a new house to be reclaimed. The scheme also applies for conversions, but VAT is charged at a reduced rate, currently 5%.
Once all construction materials have been purchased, homebuilders should calculate the total amount of VAT paid and submit a claim to HMRC. You do not have to physically carry out the work yourself; you can engage a builder, plumber, electrician, etc., to work on the house. It’s important to remember that buildings used for business purposes will not qualify for the scheme.
What’s Changed & Why?
Previously, housebuilders were required to submit their tax reclaims in writing. However, as of December 2023, those constructing their own home can claim digitally. Like the paper predecessor, the online form features a series of questions to ensure the conditions for a claim are met.
In addition to the new format, HMRC has extended the time limit for making a claim. Previously, claims needed to be made within three months of the project’s completion. However, this has now been extended to six months, further supporting DIY housebuilders looking to make a claim.
Only one claim can be made for each house build, so it’s important that claimants ensure the details enclosed in the submission are accurate. Our expert team of accountants at Digital Tax Matters would be more than happy to help you get all of your documents in line before filing a claim. Those looking to file a claim can do so here.
How Can We Help?
For assistance in filing a claim, get in touch with us at Digital Tax Matters. From ensuring the correct VAT rates are charged to clarification on which material costs can be regained, our accountants will happily lend a helping hand wherever needed.