Individuals who build their own home, or complete part of the build project themselves, are entitled to reclaim the VAT paid on materials under the VAT homebuilder’s scheme.

When engaging builders and contractors to build your home, their labour and materials are zero-rated, so the VAT homebuilders scheme puts the individual homebuilder in the same position for VAT purposes as if they had contracted the work to a third party.

The current process is that a paper claim must be submitted using a form which asks a series of questions to confirm that the conditions for reclaiming have been met, along with many pages on which to record individual purchase invoice details. Each transaction must be listed and supported by invoices or receipts which also need to be sent to HMRC.

In order to speed up the process and minimise errors, HMRC will accept claims digitally from 5 December 2023. The requirement to submit invoices with the claim will also be removed from this date.

Only one claim can be made for each house build. Currently the deadline for submitting that claim is three months after the building is completed. HMRC is extending this deadline to six months for claims submitted on or after 5 December 2023. This will give us more time to collate the required information and should lead to fewer claims being rejected due to errors or omissions.

The paper form will still be available for taxpayers who cannot submit claims digitally.