Zero rate tax on a new build - split land?

finders101

Hi everyone, I've been trying to read the gov website, and have called them too, but I'm still a little confused.

Situation: we have a 2 story fully detached garage on the far side of the garden which is in a very dangerous state (bad foundations), and have planning permission to knock it down and build a small new build dwelling (2 bedroom). We are not looking to do this for business / benefit / to sell on for profit etc - we are doing it for our family to live in. 

The gov website says that "granny annexes" and extensions etc can NOT have VAT claimed back for materials, but DIY new dwellings can. (In general I believe "granny annexes" are essentially self contained extensions, and can't be categorised as a separate dwelling, perhaps due to the type of planning permission? But not sure). 

Given that our new build dwelling will be completely detached from the house, will we be able to claim VAT back on the materials? Or in order to claim the VAT back would we need to actually split the land before the project starts so that the new build is on a separate plot of land from the current house?

The planning permission does not have any conditions in it (as far as I am aware) which would in future block us from selling it separately, although as I say, we are not looking to sell it on separately, so we would rather avoid having to split the land (and the mortgage complications that would then arise..), however we need the assurance that will be able to claim the VAT back!

Any advice would be much appreciated! Thank you!

Jeremy535897

Have a look at the legislation:
https://www.legislation.gov.uk/ukpga/1994/23/section/35

Have a read of Blacklock v Revenue and Customs (note point 6):
https://www.casemine.com/judgement/uk/5a8ff79c60d03e7f57eb01e1

I can't see anything that requires the new building to be constructed on a separately registered plot of land, but if the amounts involved are substantial, you should seek proper professional advice.