Building your own home is a tax effective way of making and saving money

VAT

In the UK new house construction and conversion costs are exempt from VAT, so keep a full set of records during the build in order to make a claim on completion.

If you are using VAT – registered subcontractors, labour-only subcontractors and builders don’t have to add VAT to their bills. Architects, planning advisors and other professional services aren’t exempt and you will have to pay VAT on hired tools, scaffolding and plant.

If you are purchasing materials you will be liable to pay VAT, which you can claim back using your receipts at the end of the project. Only one claim is allowed, so make sure you have all the paperwork you need before you send it off.

Items like carpets, white goods, gates, satellite dishes, doorbells and detached outbuildings are charged at the full rate of VAT at 20 per cent.

Stamp Duty

Property and plot purchases are taxed in relation to their sale price.

£0 - £175,000 - 0% (until September 2009 inclusive)

Capital Gains Tax

As long as you don’t use your Principle Private Residence for business purposes (except working from home) you are exempt from CGT. However, if you have a workshop or office in any part of your property that will be taxed. Additionally, any profit made on principle and private residence is free from Capital Gains Tax.

Council Tax

The rate of council tax you will have to pay relates to the value of the property as assessed by the council’s surveyor.

Illustration: Ryan Welsh