Save money and build your dream home: DIY Housebuilders claims extended

Many people dream of building their own home, but they may not know that they can recover money from HMRC. The DIY Housebuilders Scheme is a program that allows individuals who have built or converted a property for themselves to claim back the VAT they paid on building materials and services to construct the property. This puts them on par with buying a new home (which is not subject to VAT). The scheme has been around since 1977, but HMRC has recently updated their guidance and made some changes that will take effect from 5 December 2023.

What’s changed?

Currently, claims are made manually and we have seen longer processing times and increased administrative burden for people looking to file claims with HMRC. In an effort to make the VAT claim process more efficient, the DIY Housebuilders Scheme is transitioning to a digital submission process. Self-builders can now submit their claims through an electronic form, reducing paperwork and administration..

In addition to the digital forms, HMRC have extended the time limit for claims. Currently, the time limit for claims is set at 3 months following the completion of the property or the property becoming habitable. This short time scale can lead to ambiguity on completion dates and a rush to obtain all relevant documentation and compile the claim. This time limit will now change to 6 months to allow more time to obtain all the documents needed and ensure greater accuracy in the completion of the claim.

The information required by HMRC when the claim is filed will also change:

• For claims filed before 5 December 2023 the housebuilder must submit all documents, including plans and invoices – which are not always available at the time of the claim.
• From 5 December this will change – full guidance on this has not yet been issued but we understand not all documents will be required to be sent to HMRC with the claim – they will still need to be held for possible review though.

What’s not changed

The policy does not change the fact that only one claim is allowed for a housebuilder, and therefore it is important to ensure the accuracy of your claim.

Also, the timescale is definite – if claims are not filed in time or are incorrect, you run the risk of your claim being rejected.

The paper form will not disappear – those who still wish to file the claims via paper forms will still have this option, but we understand that this will follow the current set of rules and will not benefit from the extension in processing times.

How can we help?

The DIY Housebuilders scheme is a welcome boost to those taking on works themselves but it is important to submit an accurate and timely claim. These new measures will help but if you are considering submitting a claim for your new build, we would, of course, be happy to assist with any advice and preparation of the forms.

If you would like more information please get in touch with a member of our VAT team.