You are correct, if you buy the materials you will pay the full VAT.
Shopping around can be fun or a real chore depending on your outlook. Of course its your house so you should choose the doors, windows, sockets, kitchen and timber flooring.
Maybe get quotes yourself, choose your products and see if your choosen Builder can get the same products cheaper. If he can't, then do the deal yourself.
Check your local Hardware stores. You might be able to do a deal if you purchase a certain amount of materials from them - all your timber, slates, slabs, insulation, plaster, cement, screws, radiators, internal doors etc