Build Smart, Claim Smart: The VAT Man’s Guide to Self-Build VAT Reclaims

Looking for some expert advice on how to maximise your VAT savings? Recently, our MD, Sarah caught up with Andrew Jones, aka The VAT Man, at the NSBRC Show. She wasted no time in quizzing Andrew on his top insights and key tips for self-builders navigating the all-important VAT reclaim process.

Sarah: What’s the most common mistake people make when submitting a VAT claim?
Andrew: There are two big ones that instantly come to mind.

1. Paying VAT to a contractor when you shouldn’t, or paying it at the incorrect rate: This happens more often than you’d think, especially in certain areas that are easy to overlook. Hiring a crane, for example, is a tricky one. The VAT treatment is different depending on whether you’re hiring just the crane or hiring the crane with an operator. When you are hiring just the equipment, VAT is chargeable by the supplier but you’re not able to reclaim it. However, if the crane comes with an operator and a banksman, then the company should zero-rate this service at source.
2. Using your business bank account for self-build purchases: Even if the business carries your name, VAT reclaim is a personal entitlement, not a business one. Which means, if your company purchases materials for your project, you won’t be able to reclaim VAT on them. And, using your business trade account at suppliers will be problematic when it comes to the VAT reclaim.

Sarah: Where do people often get caught out, thinking they can claim for something they can’t?
Andrew: The biggest area of confusion is the kitchen. Apart from extractor fans, you can’t claim for any white goods. This rule dates back to when the VAT reclaim scheme was introduced in the 1970s. Back then, most people would take appliances like fridges, freezers, and dishwashers with them when moving house. HMRC hasn’t updated the rules to reflect the fact that nowadays most kitchen appliances are integrated. So, even if your oven, fridge, and dishwasher are built-in, you are not permitted to claim VAT on them.

Sarah: How much is the average VAT reclaim for a self-build project?
Andrew: In 2023, the average claim was around £22,500. In 2024, it was closer to £25,000. At first glance, this might suggest that either build costs are rising, or that self-build homes are getting larger or being built to a higher specification. In reality, it comes down to whether self-builders choose a turnkey solution or opt for a more hands-on approach. The more you can bundle supply and fit together, the less VAT you’ll need to reclaim. With a turnkey, materials and labour are supplied as one package, meaning you avoid VAT altogether. In contrast, a self-builder purchasing their own materials will have a higher VAT reclaim. A word of warning:  although a turnkey option may save you VAT, it still might not be the cheapest option. Generally the more active you are yourself when purchasing materials, the more money you will save. No one will work harder than you to find the best deal.

Sarah: You’re running VAT workshops at the NSBRC. Why should self-builders attend?
Andrew: HMRC provides some information—but just enough to trip you up if you’re not careful. At our workshops, we get down to brass tacks and ensure you have everything you need know to maximise your VAT reclaim. This could mean tens of thousands of pounds back in your pocket.

Sarah: Finally, if our readers could remember one thing, what would it be?
Andrew: VAT is worth 20% of your budget, so take it seriously and don’t leave it to the end to sort it out. A VAT mistake will cost you money – not HMRC!