1. Who Can Claim Back VAT in the UK?
Only VAT-registered businesses in the UK are eligible to reclaim VAT. If your business turnover exceeds the current VAT threshold (£90,000 as of 2025), registration is mandatory. Voluntary registration is also allowed if you’re under the threshold but want to claim back VAT on purchases.
Key requirements:
- VAT registration completed with HMRC
- VAT invoices available for each claim
- Goods/services used for business purposes
2. What Types of VAT Can Be Reclaimed?
You can typically claim VAT back on:
- Goods purchased for resale
- Office supplies and equipment
- Business-related travel expenses
- Services used in business operations
- Utility bills for business premises
Ensure the items are exclusively or primarily for business use. If they’re partly for personal use, only the business portion is reclaimable.
3. VAT You Cannot Claim Back
There are clear exceptions where VAT is not reclaimable, including:
- Client entertainment expenses
- Personal items or services
- Business gifts over £50 per year per recipient
- Motor vehicles used privately
- Non-VAT invoices or simplified receipts (without a VAT number)
Always double-check with HMRC guidelines if you’re unsure about a specific cost.
4. How to Claim Back VAT
The process is handled through your VAT Return:
- Keep valid VAT invoices and receipts
- Record purchases and input VAT in your accounting system
- Submit VAT returns quarterly (or as set by HMRC)
- Deduct total input VAT from output VAT
- If input VAT is higher, HMRC refunds the difference
Using accounting software like Xero, QuickBooks, or Sage can simplify this process.
5. Time Limit for Reclaiming VAT
VAT claims must be made within four years of the invoice date. Claims outside this period are usually rejected unless you have exceptional circumstances and prior HMRC approval.
6. Special Cases: Pre-Registration and International VAT
- Pre-registration VAT: You can claim back VAT on goods bought up to 4 years before registration and services up to 6 months prior—provided they’re still in use by the business.
- International VAT: If you’ve paid VAT in an EU country, you may claim it back using the EU VAT refund scheme, subject to conditions.
7. Common Mistakes to Avoid
- Not keeping proper VAT invoices
- Claiming for non-business or entertainment expenses
- Missing filing deadlines
- Not updating VAT records correctly
- Using incorrect VAT rates (e.g., zero-rated vs. standard-rated)
Regular internal reviews and proper bookkeeping help avoid HMRC penalties or rejected claims.
Frequently Asked Questions
Can I claim VAT if I’m not VAT registered?
No. Only VAT-registered businesses are eligible to claim VAT back on their expenses.
Can I claim VAT on purchases made before registration?
Yes, within limits: goods up to 4 years old, services up to 6 months old—if still in use for your business.
Is VAT reclaimable on fuel and travel?
Yes, but only if the travel is strictly for business. Fuel claims may be subject to flat-rate adjustments.
How do I know if an invoice includes VAT?
Look for a VAT number and breakdown of VAT charges. If it’s missing, you may not be able to claim.
Can freelancers and sole traders claim VAT back?
Yes, if they are VAT registered and the expenses relate directly to their business operations.
Do I need to keep physical copies of invoices?
Digital copies are acceptable if they’re readable and contain all required VAT details.
Conclusion
So, can I claim back VAT? If you’re VAT registered and your purchases meet HMRC guidelines, the answer is yes. Being diligent with invoices, accurate in records, and timely with submissions ensures your business reaps the full benefit of VAT recovery. When in doubt, consult an accountant to stay compliant and optimize your claims.
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