If you’re VAT-registered, there’s some good news: you can often claim back VAT on many of your business purchases. That means more money stays in your business, and less goes to HMRC. But how does it actually work—and what can you claim?
In this guide, we’ll walk you through the basics of claiming VAT on expenses, what counts, what doesn’t, and how to keep things simple and stress-free.
What Does ‘Claiming VAT’ Mean?
When you buy something for your business, the price often includes VAT (usually 20%). If you’re VAT-registered, you can reclaim that VAT from HMRC by including it in your VAT return.
For example:
You buy a laptop for £1,200 (including £200 VAT).
You claim that £200 back in your next return.
So, you’re effectively only paying the VAT-free amount for eligible business costs.
What Can You Claim VAT Back On?
You can claim back VAT on most goods and services you use for your business—as long as the supplier is VAT-registered and the invoice is in your business name.
Common examples include:
Computers, phones, and office equipment
Business travel costs (train tickets, fuel, mileage, parking)
Software and subscriptions (like Xero)
Tools, uniforms, or materials
Rent, utilities, and internet (if used for business)
Just make sure the VAT amount is clearly shown on the invoice or receipt, and keep all your records safe (digital is ideal!).
What CAN’T You Claim VAT On?
Not everything is fair game. Here are some things you can’t claim VAT back on:
Anything for personal use
Client entertainment (e.g. meals, drinks)
Non-VAT invoices (like from overseas suppliers not VAT-registered)
Cars (unless 100% for business use, which HMRC rarely accepts)
Employee wages and pension contributions
If something is partly business and partly personal, you can usually only claim the business portion. For example, if your phone is 60% used for work, you’d claim 60% of the VAT.
What Records Do You Need?
To keep HMRC happy (and avoid headaches later), you’ll need to keep accurate records of all your VAT-related expenses. That includes:
VAT invoices and receipts
Bank statements
Mileage logs (if you’re claiming fuel VAT)
Any calculations for partial business use
The easiest way? Use cloud accounting software like Xero, which stores receipts digitally and tracks VAT automatically. You can snap receipts with your phone and let it do the number-crunching for you.
What About Pre-Registration Expenses?
Good news: you might be able to claim back VAT on purchases made before you registered for VAT—as long as they meet certain rules:
Goods bought up to 4 years before registration (still used by your business)
Services bought up to 6 months before registration
For example, if you bought a laptop 3 years ago and still use it for work, you may be able to claim that VAT back. But the rules are a bit fiddly—so this is a great moment to check with an accountant.
How Do You Actually Claim the VAT?
You’ll reclaim VAT as part of your regular VAT return, which is usually filed quarterly.
Log your expenses in your accounting software.
Make sure each one has valid VAT and supplier info.
Submit your VAT return via Making Tax Digital (MTD) software like Xero.
HMRC processes the return and pays you back (if you’re due a refund).
If your input VAT (on purchases) is more than your output VAT (on sales), you’ll get a repayment. Otherwise, you just pay the difference.
Grab Your Free VAT Cheat Sheet
If VAT’s been doing your head in, our FREE VAT Cheat Sheet breaks it all down with simple tips to keep you on track and steer clear of any nasty surprises.
This quick, practical guide will help you:
✅ Stay compliant and dodge costly HMRC penalties
✅ Boost profits by making smarter VAT choices
✅ Set prices with confidence and stay competitive
Quick Tips to Make It Easier
Use Xero to automate your VAT tracking and returns
Upload receipts as you go—don’t save them for later
Separate personal and business spending
Review your expenses monthly to stay on track
Ask your accountant if you’re unsure—VAT rules can get tricky
Final Thoughts
Claiming back VAT on business expenses is one of the best perks of being VAT-registered. Done right, it means more cash stays in your business, and less gets lost in tax you didn’t need to pay.
If you’re not sure what you can claim—or you just want to make sure you’re not missing out—working with an accountant can save you time, hassle, and money. It’s about doing things properly from the start.
Want help claiming VAT the right way?
Book a quick call and let’s chat through your VAT questions. Whether you’re newly registered or want to make sure you’re not missing out, I’m here to help.
Comments are closed