In this section:
- What you can and can't reclaim VAT on
- Reclaiming VAT on purchases made before VAT registration
- How to calculate VAT from VAT-inclusive amounts
- Reclaiming VAT on items for both business and private use
- Reclaiming VAT on cars and motoring expenses
- VAT and business entertainment and business gifts
- Travel and subsistence: when you can reclaim VAT
- VAT on incidental expenses to clients; disbursements
- Reclaiming VAT on bad debts on goods or services supplied by you
- Dealing with VAT when goods are returned
- Understanding VAT exemption and partial exemption
- Which transaction should go on which VAT return?
What you can and can't reclaim VAT on
This guide explains when you can reclaim VAT and when you cannot reclaim VAT. Generally, you can reclaim the VAT that you pay when you buy goods or services for your business. This VAT is called input tax by HM Revenue & Customs (HMRC).
You can reclaim input tax on your purchases regardless of whether the goods or services your business sells are standard, reduced or zero-rated for VAT. You will need all of the required documentation, such as VAT receipts, to be able to reclaim the input tax that you have paid. You cannot reclaim VAT on goods and services that are used for non-business activities. Generally, you cannot reclaim VAT paid on any items related to goods or services you sell that are exempt from VAT, although there are exceptions.On this page:
- When you can reclaim VAT
- Reclaiming VAT on items bought before being registered for VAT
- When you cannot reclaim VAT
- What is business; what is non-business?
- More useful links
When you can reclaim VAT
Generally, you can reclaim VAT that you pay when you buy goods or services for your business. This VAT is called input tax by HMRC.
You can reclaim VAT on your purchases regardless of whether the goods or services your business sells are standard, reduced or zero-rated for VAT.
You will need to keep all of the required records, such as VAT receipts, to be able to reclaim VAT.
VAT rules in relation to business expenses sometimes differ from income tax rules in relation to business expenses. Therefore you should not assume that you can reclaim VAT on an item just because it is an allowable expense for income tax purposes.
Get information about products and services where VAT is charged
Read about the different rates of VAT
Find out about keeping records, invoicing and accounting for VAT
Reclaiming VAT on items bought before being registered for VAT
You can reclaim the VAT that you have paid on some items that you have bought prior to your VAT registration.
Find out what you can reclaim from the period prior to being VAT registered
When you cannot reclaim VAT
There are a number of situations where you cannot reclaim VAT that you have paid.
You cannot reclaim VAT paid for goods and services that are used for non-business activities. This includes:
- goods and services that are bought for your personal use
- cars that are not used exclusively for business purposes (and any fitted accessories and delivery)
- goods and services for non-business use bought by charities or not-for-profit organisations
Get information about apportioning VAT in mixed business-private use
Read our guide to VAT on motoring expenses
Find out more about VAT for charities and other not-for-profit organisations
You also cannot reclaim VAT on the following business expenses.
Generally, you cannot reclaim VAT paid on any items related to goods or services you sell that are exempt from VAT, although there are exceptions.
Get information about exempt and part exempt sales
VAT cannot usually be reclaimed on business entertainment expenses.
Get information about VAT and business entertainment expenses
You cannot reclaim VAT when you pay for goods or services to be supplied direct to your customer. However, in this situation the VAT may be claimable by your customer if they are VAT registered.
VAT cannot be reclaimed when you buy items such as second-hand goods, art, collectibles and antiques. However, in this situation, the margin schemes for VAT apply.
Find out about the margin schemes for VAT
You cannot reclaim VAT on items that you have bought from suppliers in other European Union (EU) states. You may be able to claim the VAT back from the relevant VAT body in those states.
Get information about VAT for international traders
You cannot reclaim VAT on assets of a business that are transferred to you as a going concern.
Read more about VAT when a business is sold in VAT Notice 700/9
What is 'business' and what is 'non-business'?
You can only reclaim VAT on goods and services you buy for your business.
You are in business if you supply goods or services in exchange for payment, and this is a frequent occurrence and an ongoing activity.
You are not in business if you occasionally receive income from sources such as leisure activities or hobbies.
Reclaiming VAT on goods that are used both for business and non-business
If you use an item for both business and non-business purposes such as a computer, you can only reclaim VAT on the proportion of the item that you use for your business.
Get information about apportioning VAT in mixed business-private use
