Can I Reclaim VAT on Labour for a Self-Build?

On a qualifying new-build home, qualifying contractor labour (and associated materials they supply and install) should be zero-rated by the contractor — so there should be no VAT to reclaim on labour in the first place. VAT431NB is principally for reclaiming VAT on building materials that you bought directly. If a contractor has charged 20% VAT on labour that should be zero-rated, that is an overcharge requiring a corrected invoice — it cannot be included in your VAT431NB claim as a reclaimable amount.

Why this matters

The correct VAT rate on qualifying contractor labour for a new-build home is 0% — not 20%. Paying 20% on labour that should be zero-rated costs you money that can only be recovered through supplier correction, not through VAT431NB.

The key distinctions

Qualifying new-build labour — should be zero-rated

Construction labour on a qualifying new dwelling (including labour-only sub-contractors) is normally zero-rated. The contractor's services — labour, plant and any materials they supply and install — form a single zero-rated supply.

Labour at 20% — potential overcharge

A contractor charging 20% VAT on qualifying new-build construction labour has applied the wrong rate. That incorrectly charged VAT cannot be reclaimed via VAT431NB — the contractor must correct the invoice.

Materials supplied and installed by contractor — zero-rated

Where a contractor supplies and installs materials as part of their overall service, those materials are included in the zero-rated supply. They are not separately claimed via VAT431NB.

Materials bought directly by you — 20%, reclaimable

If you buy materials directly from a merchants or supplier, those are correctly charged at 20%. That 20% is what VAT431NB is designed to recover — not VAT on labour.

Practical checklist

Check that contractor invoices for qualifying new-build work show 0% VAT, not 20%
If 20% VAT appears on qualifying labour, ask the contractor to review and reissue the invoice
Do not add incorrectly charged contractor labour VAT to your VAT431NB claim
Identify all materials you bought directly — these are the items for VAT431NB
Keep contractor invoices and direct purchase invoices in separate folders for clarity
Confirm labour-only sub-contractors are also applying the zero rate where appropriate

HMRC notice references

HMRC Notice 708 Section 3.2—Zero-rating — qualifying construction services

HMRC VAT431NB notes—Services and labour — not reclaimable via VAT431NB

VATBuild is not affiliated with HMRC. References to HMRC publications are for informational purposes. Always consult a qualified tax adviser before submitting a reclaim.

How VATBuild helps

What VATBuild checks for this situation

VATBuild separates contractor service invoices from direct material purchase invoices and applies the correct expected VAT rate to each. For a new build, it expects contractor service invoices to show 0% and flags any that show 20% as a potential overcharge. It identifies the direct material purchases where the 20% VAT is the reclaimable amount for your VAT431NB claim.

My builder charged VAT — is that correct?What can I claim on VAT431NB?Full new build VAT guide