Skip to main content

What are you looking for?

claiming back vat

How can I reclaim VAT?

Jump to:
Login to add to your reading list

VAT registered businesses charge VAT on their sales and may be able to reclaim the VAT charged on their purchases and other expenses. Here’s a quick guide to claiming back VAT.

How VAT works

Here’s a quick table outlining how VAT is calculated:

Output VAT less Input VAT = Amount payable/(repayable)
VAT on the sale of taxable goods and services   VAT charged on purchases and other expenses   Input VAT is deducted from output VAT and the difference is the amount due to or from HM Revenue and Customs (HMRC)

VAT calculator

Work out how much VAT you'll need to pay by typing in the figure below and clicking whether this is before (Gross) or after VAT (Net)?

£

This calculator works out how much VAT you’ll pay using the standard rate of 20%. Some goods and services fall under the reduced rate of 5%. Find out more about how VAT works. 

Your results
Recalculate with new details

This calculator works out how much VAT you’ll pay using the standard rate of 20%. Some goods and services fall under the reduced rate of 5%. Find out more about how VAT works. 

When can or can’t I reclaim VAT?

If you are not registered for VAT, you are not able to reclaim VAT on goods or services. 

If you are registered for VAT, the general rule is that VAT can be reclaimed on goods and services bought by the business, known as input tax, as long as the business makes standard, reduced or zero-rates supplies.

You will need to keep all invoices you receive as evidence to support your claim. These VAT invoices must have been issued by someone who is VAT registered. 

VAT cannot be reclaimed on goods and services that:

  • are for non-business use
  • relate to exempt supplies
  • are for client entertaining
  • are for the purchase of a car (with a few exceptions).

If you operate the VAT flat rate scheme there will be no claim for input VAT, unless it relates to capital expenditure over £2,000 (including VAT).

How do I reclaim VAT?

You reclaim VAT by showing how much input VAT you’ve paid when you submit your VAT return. This figure goes in Box 4 of the return.

HMRC will deduct this from the VAT you’ve collected in the same period, and they’ll ask you to pay the difference.

If you’ve paid more VAT than you’ve collected, you may get a repayment from VAT. 

claiming back vat

Can I reclaim VAT on business vehicles and fuel?

Input VAT cannot usually be claimed on cars. It can be claimed on some business vehicles if certain conditions are met. If a business is able to reclaim the input VAT, then VAT must be charged when the vehicle is sold. 

There are various ways a business can deal with the input VAT it pays on vehicles and fuel:

Ways to reclaim Comments
VAT on business vehicles – cars The input VAT on the purchase of a car may be claimed if it is used mainly by a taxi driver, a driving instructor or where the business is renting out cars. 
VAT on business vehicles – commercial vehicles If a VAT registered business buys a commercial vehicle, such as a van, lorry or tractor, they will usually be able to claim the VAT back. 
VAT on fuel – business only If the fuel is used for business purposes only, you can reclaim all of the VAT. 
VAT on fuel – business and private If the fuel is used for both business and private purposes, you can opt to reclaim all of the VAT and add an amount called the fuel scale charge (based on CO2 emissions) to the output VAT on the VAT return. 
VAT on fuel – mileage If the fuel is used for both business and private purposes, you can opt to reclaim only the VAT that relates to business mileage (accurate records must be kept).
VAT on fuel – opt not to reclaim If your business mileage is so low that the fuel scale charge would be higher than the VAT you reclaim you can choose not to reclaim any VAT.

Read more: Reclaiming VAT on vehicles and fuel

Can I reclaim VAT on staff travel?

You can reclaim VAT on employee travel expenses (for example fuel, hotels and meals), but you cannot reclaim VAT if you pay your staff for flat rate expenses.

Can I reclaim VAT on purchases made before registration?

The general rule is that VAT may be reclaimed on goods bought up to four years before registration and services up to six months before registration.

Goods must be bought by the business that is now VAT registered, be used for  taxable (not exempt) business purposes, still be held by the business, or used to make other goods that are still held by the business. Examples include office equipment and goods bought for resale.

In order to qualify services must be bought by the business that is now VAT registered and be used for taxable (not exempt) business purposes. Examples include legal and accountancy services.

Interactive tutorial: reclaiming VAT

We run through:

  • the basic rules on reclaiming VAT
  • what you and can’t reclaim
  • what boxes need to be filed out when completing a VAT return.

Click on the start button below to begin.

Technical Error

I’m sorry, but this file needs uploading by our technical team.

VAT Reclaim FAQs

  • How to claim VAT back?

    In order to claim VAT back you are required to show how much input VAT you have paid when you complete and submit your VAT return to Her Majesty’s Revenue and Customs (HMRC).

    You can sumbit a VAT Return each quarter online on the HMRC website. You must state how much VAT your business has been charged within the accounting period for goods and services you can claim VAT back on.

    If a purchase is also for personal or private use, you can only reclaim the business proportion of the VAT.

  • Who can claim VAT back?

    If you are registered for VAT then you are able to claim VAT back on goods and services you have purchased for business use. If your company is not VAT registered then you are unable to claim input tax.

  • How far back can you reclaim VAT on invoices?

    You are entitled to reclaim VAT on goods that have been purchased 4 years before registration and invoices for services 6 months before registration. In order to reclaim, you are required to keep invoices for these payments as evidence to support your claim to the HMRC – these goods must have been bought by you as the entity registered for VAT.

  • What can I claim VAT back on?

    You can claim VAT back on goods that are for business use which relate to standard, reduced or zero-rate supplies. To claim VAT back on services these must have been purchased by a VAT registered company and be used for taxable business purposes. You will be required to keep all invoices you receive as evidence to support your claim.

End of Article
Share this content

Brought to you by:

Sage

Sage Business Cloud Accounting is online accounting software that provides anytime, anywhere access to essential small business tools. Its features help you manage cash flow and send and track invoices, all through the cloud or via a mobile app.

Get limited time offer

Recommended reading

Back window of a car parked on the street in summer sunny day, rear view.
Article

Reclaiming VAT on business vehicles

5 min read
VAT return
Article

How do I complete my VAT Return?

5 min read
small business accounting software
Buyer Guide

Choosing the best small business accounting software

12 min read

Register with Informi today:

  • Join over 30,000 like-minded business professionals.
  • Create your own personalised account with curated reading lists and checklists.
  • Access exclusive resources including business plans, templates, and tax calculators.
  • Receive the latest business advice and insights from Informi.
  • Join in the discussion through the comments section.

or