Contractor’s invoices and claiming VAT refund on new build investment

I bought a small piece of land on which to erect a new home, although it’s not for me to live in. From what I understand, my builder should be zero rated on any invoices he sends to me. As he would have bought materials for the construction himself, am I right in thinking he doesn’t pay VAT on these items and that I can get this money discounted too? I’ve also heard that if I sell the dwelling within 10 years I’ll have to pay a proportion of the VAT refund back, but I’m not sure if that’s really the case or if there are any sanctions for this.

Your builder will buy materials with VAT applied in the standard way and, as a registered entity, he will then reclaim the tax on these. erefore, he does not need to pass on the VAT proportion of these items to you. e invoices for material costs, together with any appropriate handling charges, should be on a zero-rated basis. If you are building to sell, you may be charged Community Infrastructure Levy (CIL) which self-builders are exempt from.

If your intention is to let (rather than sell) the property, then the rules for VAT (and some other areas) are different. You can read about self-building for profit in more detail on page 94.