1. sell half of the plots to purchasers rather than developing the houses first, each plot sold for say £100k
= no VAT first grant of major interest.
However DIY builders, will normally zero rate the buildings material provided with services if the building qualifies as a dwelling/designed as a dwelling. However given that they are building holiday homes, the cost will be SR
2. The other half, he builds holiday homes and sell for £200k.
=holiday homes are not dwellings and hence SR applied.
SDLT is charged on the total inclusive of VAT. With regards to option 1, care must be taken that this is not an abuse situation where SDLT is not applied to the land on its own yet the developer still provides the building services. Such attacks are less likely given that customers are not forced to use the developer.