Buildings and construction ― DIY builders scheme

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Buildings and construction ― DIY builders scheme
  • When is VAT refundable under the DIY builders scheme?
  • What are ‘relevant works’ for the purposes of the DIY builders scheme?
  • When are buildings designed as dwellings or intended for an RRP or RCP constructed?
  • When is a building designed as a dwelling or number of dwellings?
  • When is a building for use solely for an RRP?
  • When is a building for use solely for an RCP?
  • What is a residential conversion in this context?
  • What is a non-residential building?
  • What happens if the building being converted contains a residential part?
  • More...

Buildings and construction ― DIY builders scheme

This guidance note provides details of the DIY builders scheme. The scheme allows people to claim refunds of VAT incurred in relation to some goods and services used for certain non-business construction or conversion works.

Broadly, it may be possible to use the scheme where someone is:

  1. building new homes

  2. converting existing buildings into homes

  3. building non-profit communal residences like hospices

  4. building properties for charities

Building anew home and VAT

When is VAT refundable under the DIY builders scheme?

A claim for arefund of VAT incurred on goods and services can only be made under the DIY builders scheme where the following conditions are satisfied:

  1. ‘relevant works’ have been carried out

  2. the works are carried out lawfully

  3. the works are not carried out in the course or furtherance of business

  4. VAT has been correctly charged on the goods / services used for the works

  5. the goods and services are eligible goods / services

  6. the goods and services have been used in the construction or conversion

  7. the claim is made by the person carrying out the ‘relevant works’

  8. the claim is made in the correct way (respecting time limits and including supporting documentation)

VATA 1994, s 35; VCONST24100

These conditions are explained in this guidance note.

What are ‘relevant works’ for the purposes of the DIY builders scheme?

A claim can only be made under the DIY builders scheme when relevant works are carried out.

Relevant works include:

  1. the construction of abuilding designed as adwelling or number of dwellings

  2. the construction of abuilding for use solely for arelevant residential purpose (RRP)

  3. the construction of abuilding for use solely for arelevant charitable purpose (RCP)

  4. residential conversions

VATA 1994, s 35(1A); VCONST24200

These kinds of relevant works are described further below.

When are buildings designed as dwellings or intended for an RRP or RCP constructed?

Construction in this context can be understood in the same way as it is in the context of the zero-rating for

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