DIY Housebuilders’ Scheme and VAT recovery
Carolyn O’Shea · Posted on: April 7th 2025 · read
Are you currently or intending to construct or convert a property that will be used as a family home by you or your relatives? If so, you could reclaim the VAT you have incurred on the construction from HMRC.
The DIY Housebuilders’ Scheme can be used if you are building or converting the property yourself or paying a third-party contractor to complete the works.
You cannot use the scheme if you intend to use the property for a business purpose.
What it means for you?
If a contractor purchases the building materials and constructs the property, you should be charged zero rated VAT for the whole supply. If the property is being converted, you should incur 5% VAT from the contractor.
If you purchase the building materials yourself, you will be charged 20% VAT by the building merchant and will not benefit from the zero or 5% VAT rate.
So that you are not disadvantaged by purchasing the materials yourself, the DIY Housebuilders’ Scheme allows you to recover the VAT you have incurred.
There are however restrictions on what costs VAT can be recovered on. HMRC has published a detailed list at Goods and services you can claim for under the VAT DIY Scheme - GOV.UK stating which items can be and can not be included in the claim.
HMRC has recently updated the list to confirm VAT incurred on electrical blinds and broadband is not recoverable via the DIY Housebuilders’ Scheme.
How to make a claim
Once the building works are finished and you have received the completion certificate, you have six months to submit the claim to HMRC.
The claim can be submitted to HMRC using an online form or by post. In both cases, you are required to complete the claim form (VAT431NB for property construction and VAT431C for property conversions) and include a schedule of the purchases relating to the claim.
HMRC should respond within two to four weeks confirming receipt of the claim. They will ask any questions they have and request a sample of the invoices listed within the schedule.
Once HMRC has concluded their review, the VAT will be repaid to the bank account you stated on the claim form.
HMRC will not repay any VAT incorrectly charged by your supplier.
How we can help
MHA is best placed to assist you with your claim to ensure a streamlined process from receipt of the completion certificate to you receiving the repayment from HMRC. We can reduce your administrative burden of completing the claim form and schedule and ensure the claim submitted is accurate to help reduce follow up queries from HMRC.
To maximise your recovery of VAT, we can help to identify invoices you have paid which you were charged the incorrect VAT rate by your supplier. As this VAT cannot be reclaimed from HMRC, we can contact your supplier on your behalf to recover the VAT incorrectly charged to you.
