Reclaiming VAT on business expenses UK | Figures Chartered Accountants

VAT you pay on business purchases is often reclaimable. That means you can get money back from HMRC when your input VAT (on what you buy) exceeds your output VAT (on what you sell). Many UK small businesses miss out because they do not know the rules, keep poor records, or assume they cannot reclaim. This article explains reclaiming VAT on business expenses in the UK: what you can claim, what you need to keep, and common mistakes to avoid.

We cover the basics of input VAT, what is and is not reclaimable, and how to stay on the right side of HMRC. This is for VAT-registered businesses in the UK that want to maximise legitimate reclaims.

When can you reclaim VAT on business expenses?

You can reclaim VAT on goods and services that you use for your business (for "business purposes") and that are not subject to specific blocking rules. The supply must be to you (the business), and you need a valid VAT invoice showing the VAT charged. If you use something partly for business and partly for private use, you can normally reclaim only the business proportion. HMRC can ask to see evidence that the expense was incurred for the business. For more on VAT and compliance, see our Statutory Accounts & Tax service.

What you can typically reclaim

Office and overheads. Rent, utilities, stationery, and insurance for business premises. If you work from home, you can reclaim VAT on the business proportion of relevant costs (or use a simplified method).
Professional services. Accountancy, legal, and consultancy fees that relate to the business.
Equipment and software. Computers, software, and other kit used for the business. There are special rules for cars (see below).
Travel. VAT on train tickets, accommodation on business trips, and similar. Not on commuting. Mileage claims do not include a VAT reclaim (you use HMRC rates); if you pay for fuel and have a VAT receipt, you can reclaim the VAT on the business proportion.
Stock and costs of sale. Materials, goods for resale, and direct costs that carry VAT.

GOV.UK VAT on business expenses summarises what you can and cannot reclaim.

What you usually cannot reclaim

VAT on exempt or non-business expenditure. If the purchase is not for the business, or is for an exempt activity, you cannot reclaim.
Entertainment of clients. VAT on client entertainment is normally blocked. Staff entertainment (e.g. an annual party within limits) can be treated differently; check the rules.
Cars available for private use. VAT on the purchase or lease of a car that is available for private use is generally not reclaimable. There are exceptions (e.g. cars used exclusively for business, or for certain trades). VAT on fuel for such cars is also often blocked or subject to a scale charge.
Goods or services without a valid VAT invoice. You must have the right documentation.

Example

A consultancy buys a new laptop for the office, pays for cloud software, and gets a VAT invoice for accountancy fees. It can reclaim the VAT on all three. The director also buys a car that they use for work and family; VAT on the car purchase is not reclaimable because of the private use. Keeping invoices and a clear record of business use makes reclaims straightforward. Our bookkeeping service keeps records in shape so VAT returns are accurate.

Records you must keep

You need a VAT invoice showing the supplier's name and VAT number, the date, a description of the supply, the VAT amount, and the total. Keep records for at least six years. HMRC can ask to see them. Making Tax Digital for VAT means your records must be kept digitally and submitted via compatible software.

UK tax and legal accuracy

VAT reclaim rules are set out in the VAT Act 1994 and HMRC guidance. The position described reflects current rules for 2024/25 and 2025/26. This article is for informational purposes only and does not constitute professional tax or financial advice. Please speak to a qualified accountant before taking action.

Frequently asked questions

Can I reclaim VAT on a car?

Generally not if the car is available for private use. There are limited exceptions (e.g. driving instruction, taxis). Your accountant can advise.

What if I am on the flat rate scheme?

Under the flat rate scheme you do not normally reclaim input VAT (except on certain capital purchases over £2,000). So the reclaim rules above apply mainly to the standard or cash accounting scheme.

Do I need original invoices?

HMRC accept digital copies provided they are legible and complete. The important thing is that you can show the expense was for the business and the VAT was charged.

What if I forgot to reclaim VAT on a past return?

You can correct errors on a later return (within limits) or submit a separate error correction. There are time limits and disclosure rules; your accountant can help.

Can I reclaim VAT on food for the office?

VAT on food for staff (e.g. office tea and coffee) can be reclaimable if it is for the business. Client entertainment is not. The line can be fine; when in doubt, ask your accountant.

Summary and next steps

Reclaiming VAT on business expenses in the UK means claiming back the VAT you pay on qualifying business purchases, supported by valid invoices and records. Know what you can and cannot reclaim (including the rules on cars and entertainment), keep good records, and include reclaims on your VAT return. It can improve your cash flow and reduce net VAT cost.

If you would like help with VAT, record-keeping, or returns, we would be glad to help. At Figures Chartered Accountants we work with UK businesses on VAT and tax. You can book a discovery call or look at our Statutory Accounts & Tax and Bookkeeping & Xero services.