Travel and subsistence: when you can reclaim VAT

Generally you can reclaim VAT on employee travel and subsistence expenses such as travel, meals and accommodation if you pay for those costs in part or in full. You cannot reclaim VAT on travel and subsistence expenses when you pay an employee a flat rate for subsistence expenses.

This guide will explain what HM Revenue & Customs (HMRC) considers employee travel and subsistence expenses, and who HMRC considers to be an employee for travel and subsistence purposes.

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Travel and subsistence

You can generally reclaim the VAT on travel and subsistence expenses where a director, partner, sole proprietor or employee is away from their normal place of work on a business trip.

You must pay for the actual cost or a proportion of the actual cost of these expenses. You cannot reclaim VAT on travel and subsistence expenses when you pay an employee a flat rate for these expenses.

Travel and subsistence expenses include:

  • rail or air transport (although these are generally zero-rated for VAT)
  • use of a private or hire car
  • meals
  • accommodation

You cannot reclaim VAT on employee travel or subsistence expenses that are:

  • in full or in part business entertainment expenses for VAT purposes
  • for non-business use such as a holiday

Get information on reclaiming VAT on business entertainment

Find out about apportioning VAT in mixed business-private use

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Motoring expenses

There are special rules regarding the reclaiming of VAT on motoring expenses.

Find out about reclaiming VAT on motoring expenses

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Who is an employee for VAT travel and subsistence purposes

You can only reclaim VAT on travel and subsistence expenses for your employees.
Your employees can include the following people:

  • a person directly employed by you
  • directors, partners or anyone else that is managing your business
  • self employed people - subsistence expenses only - who are treated as normal employees
  • helpers, stewards or other people essential to the running of sporting or similar events

The following people are not considered employees for travel and subsistence purposes:

  • shareholders who are not also employees
  • pensioners and former employees
  • job applicants and interviewees

Get information on VAT on incidental costs to clients (disbursements)

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More useful links

Read more about reclaiming VAT on subsistence in VAT Notice 700

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