Input tax ― building materials and the builder’s block

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note focuses on the VAT treatment of building materials and when VAT recovery on certain items is blocked from recovery.

For in-depth discussion of the legislation and case law in relation to building materials, see De Voil Indirect Tax Service V4.242 and for the input tax block, see De Voil Indirect Tax Service V3.444.

For an overview of input tax generally, please refer to the Input tax ― overview guidance note.

When is VAT recovery on goods incorporated into a building blocked?

VAT on costs incurred for the purpose of making a taxable supply, including a zero-rated supply, can usually be recovered ― see the Input tax ― conditions for recovering VAT guidance note. There is, however, a specific block, sometimes referred to as the builder’s block, on recovery of VAT where all of the following conditions apply:

•
the VAT relates to goods that are not building materials for VAT purposes ― see the ‘What are building materials for VAT purposes?’ section of this guidance note

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Input tax ― building materials and the builder’s block

Input tax ― building materials and the builder’s block