One of the great advantages of undertaking a new build, and one of the main reasons as to why it can be so cost efficient, is the fact that materials and labour are zero rated for VAT.
This month's article illustrates one of the most satisfying tasks of building your own home - reclaiming VAT once your project is complete!
Under certain circumstances it is possible to reclaim the VAT back on the cost of building your new home. A full list of these conditions can be found in HM Revenue and Customs Notice 708. The main condition outlined in this notice relating to a new build states that a zero-rated building is constructed when 'it is built from scratch, and, before work starts, any pre-existing building is demolished completely to ground level'. If this sounds like your project then chances are your new build project will be zero-rated.
This is a very encouraging prospect considering the forthcoming increase in VAT early next year. All labour on your new build will be devoid of VAT completely and VAT charged on materials directly related to the construction of your new build can be reclaimed at the completion of your project.
The supply of a timber frame kit comes under the materials category meaning it too is zero-rated. The current rate of VAT will initially be charged as required by law, which will then be reclaimed at the end of your project once a completion certificate is achieved.
Our service is generally 'supply only' so for the majority of cases the above applies with regard to VAT procedure. However, under certain circumstances it is possible to avoid VAT on the timber frame kit if our service involves the erection of your new home. For more information about this and how it could relate to your project please contact a member of our staff.
Reclaiming VAT is one of the main advantages of undertaking a new build project and one of the main reasons as to why it can be so cost efficient. Remember, all labour on 'zero-rated' construction projects is devoid of VAT so it is important to check your invoices to ensure VAT has not been charged on a service. And, VAT is charged on materials used to construct 'zero rated' new build projects but can be claimed back within a three month period once a completion certificate is received. This is the one of the most enjoyable tasks in a new build project so it is important you retain all receipts, invoices, etc. along the way to ensure you can claim back all the VAT you are entitled to.