The subsistence allowance rates in the UK 

Here are HMRC’s daily subsistence allowance rates in the UK for 2025:  

Meal subsistence rates in the UK

Accommodation rates in the UK

What about mileage rates? 

While your employees can’t claim back the actual hours they spend driving for work, they can claim mileage allowance to cover the costs of using their own vehicle. HMRC’s mileage allowance rates are designed to compensate for fuel, wear and tear, and other expenses, helping employees offset the costs of business travel.

Here are the approved mileage rates for 2025: 

The subsistence allowance rates outside the UK

If you’re travelling abroad for work, HMRC provides subsistence rates in local currencies for different countries and cities. 

Here are some of the most popular destinations in 2025: 

How to report subsistence allowance spending to HMRC 

Reporting subsistence allowance to HMRC is fairly straightforward and follows the same process as reporting other work-related expenses.  

At the end of the tax year, you need to complete a P11D form for each employee who received reimbursements for expenses (like meal allowances). Additionally, a P11D(b) form may be required to summarise the total expenses and calculate any necessary Class 1A National Insurance contributions. 

It’s also worth noting that from April 2026, all benefits in kind (BIK)—except for loans and living accommodation—must be reported and taxed through payroll. Which means that you’ll no longer be able to process BIKs through P11Ds.  

To make sure everything runs smoothly, you should have a clear process in place for collecting, verifying, and recording your expenses.  

Say hello to Capture Expense 

Want to keep all your expenses, including subsistence allowance in the UK, organised and in one place?  

Book a demo with Capture Expense today and see how easy it is to submit, track, and manage your expenses—saving you time and keeping you compliant with HMRC. 

When it comes to claiming VAT on travel expenses, the key is knowing what’s eligible and what’s not. While you can reclaim VAT on things like hotel stays, car hire, and fuel for company vehicles, other costs—such as flights and train tickets—are zero-rated, meaning there’s no VAT to reclaim.  

You probably have lots of questions around what you can and can’t claim. Luckily for you, we have all the answers. 

What is VAT on travel expenses? 

VAT on travel expenses refers to the Value Added Tax (VAT) that’s applied to costs incurred during business-related travel. This can include expenses like transportation, accommodation, meals, and other travel-related services.  

For businesses, VAT on travel expenses can often be reclaimed if the travel is for work purposes, provided the expenses are appropriately documented and fall within VAT guidelines.  

However, VAT rules can vary depending on the country or region, and some travel expenses may be exempt or have different VAT rates. 

What business travel expenses can you claim VAT on? 

When you’re travelling for business in the UK, you can usually reclaim VAT on certain expenses, as long as they’re for work purposes and you have valid VAT receipts.  

Here’s a list of the business travel expenses can you claim VAT on:  

1. Transport costs:

• Car hire 
• Fuel for company vehicles 
• Taxis and other on-demand transportation services
• Public transport (trains, buses, flights)

2. Accommodation:

• Hotel stays 
• Bed and breakfast (B&B)
• Serviced apartments 

3. Meals and drinks:

• Meals and drinks (breakfast, lunch and dinner) 
• Hotel meals
• Working lunches/dinners  

4. Extras and incidentals:

• Parking fees 
• Motorway tolls 
• Wi-Fi and Internet charges
• Business-related subscriptions 

5. Other business travel expenses:

• Business gifts (provided they comply with HMRC gift-giving guidelines) 
• Conference and seminar fees 
• Business equipment and supplies (laptops or office materials purchased for use during business travel) 

And when it comes to employee vs. client travel 

Employee travel: let’s say an employee travels to a conference on behalf of the business. The company books the employee’s flights and hotel accommodation and incurs VAT on these expenses. As this travel is for business purposes, the company can reclaim the VAT on the flights, hotel stays, and any other associated expenses. 

Client travel: now, suppose the same company arranges travel for a client to attend the same conference. The company books and pays for the client’s flights and accommodation and then reimburses the client for these costs. Here, VAT on these travel expenses isn’t recoverable (unless the expense is part of a business transaction that directly relates to the company’s taxable services). 

Can you claim VAT on train travel?

No, you can’t claim VAT back on train tickets. That’s because train fares in the UK are zero-rated for VAT, meaning no VAT is charged in the first place—so there’s nothing to reclaim. 

Think of it this way, imagine you’re travelling from London to Manchester for a business meeting, and you book an advance train ticket for £80. When you check the receipt, you’ll see no VAT has been added. Since VAT wasn’t charged, you can’t claim it back. 

Can you claim VAT on air travel?

No. Just like train tickets, flights are zero-rated, which means no VAT is charged to begin with. 

Let’s say you book a return flight from London to Edinburgh for a business trip, and the ticket costs £150. When you check the receipt, you won’t see any VAT added. 

Before attempting to reclaim VAT on any expense, always check your receipts. If there’s no VAT listed, there’s nothing to claim! 

Can you claim VAT on mileage?

Yes, you can claim VAT on mileage expenses but only on the fuel portion of the mileage allowance—not on the part covering ‘wear and tear’. 

Say you’re a VAT-registered business, and you reimburse an employee for driving 100 miles in their own car for work. You pay them 45p per mile, (which is the standard HMRC mileage rate for 2024/25). However, you can’t reclaim VAT on the full 45p—only on the fuel element. 

To work this out, you’ll need HMRC’s advisory fuel rates, which are updated every quarter. If the fuel portion is, say, 14p per mile, you can reclaim VAT on that part, not the full 45p. 

So, before making a claim, check the latest advisory fuel rates and make sure you keep accurate records, including mileage logs and fuel receipts. 

Can you claim VAT on foreign travel expenses?

Yes, you can reclaim VAT on foreign travel expenses—but only on certain costs, and the process is different from claiming UK VAT. 

Imagine you’re on a business trip to Germany. You stay in a hotel, rent a car, and take clients out for dinner. The hotel and car hire include German VAT (Mehrwertsteuer), and in most cases, you can apply for a refund on these expenses. However, the restaurant bill isn’t reclaimable, as Germany doesn’t allow VAT refunds on meals. 

You can’t reclaim this foreign VAT through your usual UK VAT return. Instead, you’ll need to apply for a refund through the EU VAT refund scheme (if the country is in the EU) or a similar process for non-EU countries. The rules vary, so it’s important to check what’s eligible in each country. 

Are you struggling to claim VAT on travel expenses?  

Capture Expense takes the guesswork out of VAT claims by automatically applying the correct rates and making sure your records are 100% HMRC-compliant. Book a personalised demo today and see how easy it is to increase your VAT claim success by 34% 

Did you know 43% of senior finance leaders are very concerned about HMRC inspections? 

That means that nearly half of all CFOs, Finance Directors, and Heads of Finance feel apprehensive or underprepared for an unexpected visit from the taxman. 

And maybe that’s partly because expense compliance in the UK is complex, and can be time-consuming. But the trick is having a robust policy in place to make staying compliant just that little bit easier.

Now before you can create your company expense policy, and implement processes for complying with HMRC, you need to know what’s expected of you.

Let’s shine some light on the expense compliance areas to focus on to make sure you keep the taxman at bay. 

What do HMRC expect from you?

If you have an HMRC compliance check, they’ll review your entire expense compliance process for non-compliance with HMRC expense regulations.  
 
Their primary focus is to make sure that you have:  
 
• A clear and enforced policy  
• Appropriate approval processes  
• Comprehensive documentation  
• Appropriate checks and controls  
• Full compliance with Tax and VAT requirements  
• A robust and secure payment process

The VAT rates in the UK

VAT (or Value Added Tax) is a tax added to the price of most goods and services in the UK.

If you’re a business owner, you’ll need to register for VAT if your taxable turnover exceeds £90,000 in a 12-month period. 

Once registered, you’ll charge VAT on your sales and reclaim the VAT you’ve paid on your purchases.  

Here are the VAT rates for 2025: 

 When you mustn’t charge VAT

There are certain goods and services that are exempt from VAT. This means you won’t charge VAT on these items — even if you’re VAT-registered.

Some examples of VAT-exempt items include:

• Financial services: banking, insurance, investments. 
• Healthcare and medical treatments: doctor’s visits, prescriptions. 
• Education and training: school fees, university tuition. 
• Charity services: charitable donations, fundraising events. 

You can also access HMRC’s full list of VAT exempt goods. 

Remember, even though you don’t charge VAT on these items, you still need to keep track of them in your business records. 

Expense compliance when it comes to vehicle mileage 

Did you know that your employees can claim back time spent traveling for work? 

That’s right, by following HMRC’s mileage rates, you can empower your employees to claim back vehicle expenses incurred for business purposes.

Here are the mileage allowance rates for 2025:

 What are HMRC’s advisory fuel rates?

HMRC’s advisory fuel rates apply to company-owned cars and serve two main purposes:

1. Reimbursing your employees for business travel expenses incurred in a company car.  
2. Managing reimbursements when your employees use a company car for personal travel and need to repay the business.  

Here are the advisory fuel rates for 2025:

Petrol

Diesel

 LPG (Liquefied Petroleum Gas) 

 Electric

 How to reclaim VAT on fuel

If you’re VAT-registered, you can often reclaim the VAT you’ve paid on fuel costs.

However, there are a few conditions:

• Business use: the fuel must be used for business purposes. This could be for company vehicles or employee reimbursements for business mileage.
• Accurate records: you’ll need to keep detailed records of your fuel purchases, including receipts and mileage logs. 

There are two ways you can reclaim VAT on fuel:

1. Reclaim all the VAT paid on fuel purchases and pay the appropriate fuel scale charge for your vehicle.  
2. Claim VAT only for the fuel used during business trips by maintaining thorough mileage records to demonstrate usage exclusively for business purposes.  

Expense compliance around carbon reporting

From July 2025, you’ll be required to provide more detailed information about your sustainability practices and climate related risks. 

This means if your business meets certain criteria, such as having a significant turnover (exceeding £500 million) and employee count (at least 500), you’ll be required to report on your carbon emissions.

You’ll need to:

• Track your carbon footprint: monitor your direct emissions (Scope 1) and indirect emissions from purchased energy (Scope 2).
• Assess your supply chain: evaluate the carbon footprint of your suppliers and consider ways to reduce emissions throughout your supply chain (Scope 3).
• Set reduction targets: establish clear targets for reducing your carbon emissions and develop a plan to achieve them. 

What you need to know about tax compliance 

When it comes to tax compliance, we know the number one question on your mind: are reimbursed expenses taxable in the UK? 
 
The short answer is no. If expenses are wholly, exclusively, and necessarily incurred in the performance of your job, they aren’t taxable. 
 
For example, if you’re a salesperson and your job requires you to travel to meet with clients. Any expenses you incur, such as travel costs, accommodation, and meal expenses, can usually be reimbursed tax-free. 

Are there any exceptions? 

Yes, if the expenses aren’t classed as “work-related”, or if they’re seen as providing a personal benefit. 
 
Here are a couple of examples:   

• Excessive or extravagant expenses: if your expenses are deemed unreasonable or excessive, they may be considered taxable income.  
• Personal expenses: reimbursements for personal expenses, such as commuting to and from work, are generally taxable. 

We know it can be tricky, but knowing the difference between deductible and non-deductible expenses can significantly impact your financial planning and tax liability.  

What you need to know about corporation tax

If you’re setting up a limited company in the UK, you’ll need to register for corporation tax within three months of starting your business.

This tax is applied to your company’s profits, investments, and any gains from selling assets.

Here’s a breakdown of the 2025 rates:

• Small profits rate (companies with profits under £50,000): 19%
• Main rate (companies with profits over £250,000): 25%

What you need to know about National Insurance Contributions   

National Insurance Contributions (NICs) are essentially taxes on earnings that help fund state benefits like the NHS and State Pension.  
 
If you’re a business owner in the UK, you’ll need to understand the different types of NICs and how they apply to your business:

Class 1 NICs

• Employee NICs: deducted from your employees’ wages. 
• Employer NICs: paid by you, on top of your employees’ wages.

Class 1A NICs

Class 1A NICs are a type of tax that you pay on certain benefits you provide to your employees.

These benefits, often called “Benefits in Kind (BIK)” can include things like:   

• Company cars: if you provide your employees with company cars, you’ll need to pay Class 1A NICs on the benefit value of the car.  
• Private healthcare: if you offer private health insurance to your employees, you’ll also need to pay Class 1A NICs on the cost of the insurance.  
• Accommodation: if you provide accommodation for your employees, such as a company flat or house, you’ll need to pay Class 1A NICs on the benefit value of the accommodation. 

Why you need to create an expense policy 

A company expense policy is like a roadmap to expense compliance. It outlines what expenses are reimbursable, how much you can claim, and what documentation you need to provide (for your company or HMRC).

By having a clear and concise policy in place, you can make sure that your employees understand the rules and submit accurate expense claims. 

To help you get started you can download our free expense policy template. 

How to report your expense reimbursements to HMRC

You have a couple of options to choose from when reporting the reimbursement of expenses: 

• You can use a P11D form to report your expenses and benefits to HMRC at the end of the tax year. 
• You can opt for payrolling, where you include the value of the expenses and benefits in the employee’s pay.  

It’s worth noting that starting from April 2026, all BIKs that you provide (except for loans and living accommodation) will have to be reported and taxed through payroll.

Your 6-step guide to HMRC expense compliance

1. Understand the rules

• Familiarise yourself with HMRC’s guidelines on allowable expenses. 
• Stay updated: keep an eye on any changes to tax laws and regulations.

2. Keep detailed records

• Keep all receipts for expenses — no matter how small. 
• Maintain a mileage log: if you use your car for business, keep a detailed record of your mileage. 
• Document the business purpose: explain why each expense was necessary for your job.

3. Categorise your expenses

• Clearly distinguish between expenses incurred for business purposes and those for personal use. 
• Use appropriate expense categories (e.g., travel, accommodation, meals, office supplies).

4. Claim the right amount

• Make sure that your expense claims are in line with HMRC’s rules and regulations. 
• Only claim for reasonable and necessary expenses.

5. Submit your claims on time

• Follow your company’s specific procedures for submitting expense claims. 
• Don’t delay in submitting your claims to avoid potential issues. 

6. Choose an expense management system that fully complies with HMRC

A sophisticated expense management system like Capture Expense will help you automate the process, reduce errors, and comply with HMRC regulations.  

You need to Look for a system that can: 

• Automatically calculate mileage claims based on HMRC rates 
• Generate accurate expense reports 
• Integrate with your accounting software 
• Provide real-time insights into your spending habits 
• Offer robust audit trails for expense compliance purposes 

Do you still need help with expense compliance?

Book a personalised demo today and we’ll help you with all your expense compliance needs. There’s not a mileage query we can’t handle, or a tax problem we can’t solve.

Did you know that business travel in the UK hit a record £68 billion in 2024? Running a business means keeping a close eye on every opportunity to increase sales and manage company spend wisely. One area where you could see substantial savings is by claiming VAT on mileage.  

Many business owners are unaware that VAT can be reclaimed on business-related travel, but with the right guidance, you can make the most of this opportunity. 

Let’s look at who can claim VAT on mileage expenses and how to make a claim.   

Who can claim VAT on mileage?

Think of claiming VAT on mileage like getting a refund on part of your fuel costs—but only if you follow the rules. 

Here they are:

Your company must be VAT–registered 

Being VAT-registered means you charge VAT on your sales and can reclaim VAT on your business expenses. 

If your business isn’t VAT-registered, you can’t reclaim VAT on anything, including mileage.  

It must be for business use only 

Your trip has to be 100% work-related.

If you’re: 

• Driving to meet a client? That counts.  
• Going to a networking event? Absolutely.   
• Taking a detour to grab a coffee with a friend on your way home? Nope, that part doesn’t count! 

Let’s break it down with a real-world scenario

Imagine you run a small IT consulting business, and you’re VAT-registered.  

You often drive to meet up with clients, attend tech conferences, and visit suppliers for new equipment. Since all these trips are for business purposes, you can claim VAT on the mileage. 

Now, let’s say you also use the same car for personal trips—like going on holiday or picking up groceries. That mileage can’t be included in your VAT claim because it’s not business-related. 

What do you need to make a successful claim? 

First and foremost, you need to keep accurate records. So, every time you drive for work, you should keep track of:

• The date. 
• Where you started and where you went. 
• The reason for the trip. 
• How many miles you covered. 

You also need fuel receipts that show VAT details—a credit card statement alone won’t cut it.  

Your step-by-step guide to claiming VAT on mileage

Let’s imagine Sarah runs a small consulting business and frequently travels to meet clients. She wants to claim VAT on her mileage expenses.  

Here’s how she does it: 

Step 1. Gather fuel receipts 

Sarah makes sure to keep all her fuel receipts whenever she fills up her car. Since VAT can only be reclaimed on fuel for business use, having VAT invoices from petrol stations is essential. 

She stores them in a folder and uploads digital copies to her expense management platform to stay organised. 

Step 2. Track business mileage 

Sarah keeps a detailed mileage log. For every business trip, she records: 

• The date of the journey. 
• The journey details (i.e., from her office in Manchester to a client’s premises in Liverpool). 
• The purpose of the journey (i.e., client meeting). 
• The distance travelled (80 miles round trip). 

She uses Capture Expense’s AI-powered matching tool to accurately categorise her expenses, making sure she only claims VAT on business mileage.  

By maintaining an accurate mileage log, she can provide evidence for all her business-related journeys if HMRC ever needs verification. 

Step 3. Apply the correct advisory fuel rate 

Sarah drives a petrol car with a 1.6-litre engine. Checking HMRC’s advisory fuel rates for 2025, she finds that the applicable rate is 15p per mile. 

Step 4. Calculate the fuel cost for business use

She multiplies her business miles (see Step 2) by the advisory fuel rate: 

80 miles × £0.15 = £12.00 (fuel cost for this trip). 

If Sarah completes multiple business trips in a month, she repeats this calculation for each journey and then adds the totals together.  

Step 5. Work out how much VAT to reclaim 

VAT is included within the fuel cost, so to extract the reclaimable amount, Sarah divides by 6 (since VAT at 20% means 1/6 of the total price is VAT): 

£12.00 ÷ 6 = £2.00 reclaimable VAT for this trip.

If Sarah drives 1,500 business miles in a month, her VAT calculation would be:

1,500 miles × £0.15 = £225 (total fuel cost).

£225 ÷ 6 = £37.50 reclaimable VAT. 

At the end of the quarter, Sarah includes her VAT mileage claim in her VAT return.  

Are you looking to claim VAT on mileage?

If you need help claiming VAT on mileage or with any other aspect of your travel expenses, book a demo today to see how we can help.  

Filing your VAT return can be a complex process—especially if you’re new to VAT or unsure about the VAT return deadlines.  

To make things simple, we’ll walk you through what a VAT return is, the VAT return deadlines, and a step-by-step guide on how to do a VAT return. 

What’s a VAT return?

A VAT return is a document that businesses submit to HM Revenue and Customs (HMRC) to report the value-added tax (VAT) they have charged on sales (output tax) and the VAT they have paid on business purchases (input tax).  

It typically covers a specific accounting period, either quarterly or annually, and allows the business to calculate how much VAT it owes or can reclaim.  

Businesses must file VAT returns even if no VAT is due, and they must do so on time to avoid penalties or interest charges. 

What to include in your VAT return

When you file your VAT return, you’ll need to include:

• Your total sales and purchases. 
• The amount of VAT you owe. 
• The amount of VAT you can reclaim. 
• The amount of VAT you’re owed from HMRC (if you’re reclaiming VAT on business expenses) 

What are the VAT return deadlines?

Here are the quarterly VAT return deadlines for 2025: 

Under the Making Tax Digital (MTD) regulations set by HMRC, all VAT returns must be filed digitally using MTD-compatible software. 

What are the penalties for late VAT submissions and payments?

Penalties for submitting your VAT return late 

If you submit your VAT return late, HMRC has a penalty system based on points. Each time you’re late, you get a penalty point. But a single point alone won’t lead to an immediate fine. 

However, once you hit a certain number of points—called the penalty threshold—you’ll get a fine of £200. After that, every additional late submission will cost you another £200. 

The number of points you’re allowed before getting fined depends on how often you file your VAT return.

Here’s the penalty point threshold for your accounting period:

• Annual submissions → 2 points 
• Quarterly submissions → 4 points 
• Monthly submissions → 5 points 

Penalties for late VAT payments 

If you miss a VAT payment, HMRC has a separate penalty system that works on percentages rather than fixed fines. The longer you take to pay, the more it costs you.

Here’s how it works: 

• 0-15 days late: no penalty at all if you pay or arrange a payment plan within this time. 
• 16-30 days late: you’ll get a 2% penalty based on what you owed on day 15. 
• 31 days late: you’ll be charged:
  – 2% on what you owed on day 15.
  – Another 2% on what you still owe by day 30.

 So, if you haven’t cleared your balance by this point, you’re already at a 4% penalty.

• Beyond 31 days: from day 31 onwards, you’ll be charged an extra 4% per year, calculated daily, until you pay off the full amount. 

How to do a VAT return

Here’s a step-by-step guide on how to do a VAT return: 

Step 1. Know your VAT scheme 

Before you start, it’s important to know which VAT scheme your business falls under. HMRC offers different schemes depending on your turnover and how you prefer to manage your VAT: 

• Standard VAT scheme: you submit a VAT return every quarter, reporting VAT on sales and purchases. 
• Flat rate scheme: designed for small businesses, this lets you pay a fixed percentage of your turnover as VAT instead of working out individual transactions. 
• Annual accounting scheme: you file just one return a year but make advance VAT payments throughout. 

Step 2. Get your documents ready

To avoid last-minute scrambling, make sure you have all the documentation you need: 

• Sales invoices (to calculate VAT collected from customers). 
• Purchase invoices (to work out the VAT you can reclaim). 
• Receipts for business expenses. 
• Records of zero-rated or VAT-exempt sales (if applicable). 

Step 3. Work out how much VAT you owe or can reclaim 

Now, it’s time to crunch the numbers. You’ll need to calculate: 

• VAT on sales (output VAT): the total VAT you’ve charged customers. 
• VAT on purchases (input VAT): the VAT you’ve paid on business-related expenses. 

If your output VAT is higher than your input VAT, you’ll need to pay the difference to HMRC. However, if your input VAT is greater than your output VAT, you can claim a refund for the excess amount. 

Step 4. Use Making Tax Digital software 

Since April 2022, all VAT-registered businesses, regardless of turnover, must submit returns using MTD-compliant software.  

Here are some popular MTD-compatible software: 

• Sage 
• Xero 
• Capium 
• QuickBooks 

Make sure the software you choose integrates well with your existing records and gives you a clear breakdown of your VAT return before submission. 

Step 5. Submit your VAT return 

Once you’ve checked everything, it’s time to file your VAT return.  

Here’s how: 

1️. Log in to your HMRC-approved MTD software.
2️. Link it to your HMRC account (if you haven’t already).
3️. Go to the VAT returns section.
4️. Enter your figures (manually or let your software pull them through).
5️. Review everything carefully (remember mistakes can lead to penalties).
6️. Submit your VAT return and save the confirmation for your records. 

Step 6. Pay your VAT or get a refund 

Once your VAT return is submitted, you’ll either need to pay HMRC or wait for a refund. 

• To pay: you can use a direct debit, bank transfer, or debit/credit card. Make sure you pay by the deadline to avoid penalties. 
• To claim a refund: if you’ve paid more VAT than you owe, HMRC will typically process refunds within 10 working days (as long as there are no issues). 

Never miss VAT return deadlines with Capture Expense 

Capture Expense helps you stay on top of VAT return deadlines by providing auditable reports that give you a clear record of all your transactions—including VAT returns. Book a demo today to see how it works. 

Worried about getting your VAT payments wrong? You’re not alone. But with the right information, it’s easier than you might think. 

Let’s break down the UK VAT rates, what is the vat threshold, and how to calculate exactly what you owe HMRC. 

What are the VAT rates in the UK? 

Here are the current VAT rates in the UK for 2024/2025: 

What goods and services fall under the standard UK VAT rate?

Here’s a list of goods and services that fall under the standard UK VAT rate. For a more comprehensive list, including items that are exempt or outside the scope of VAT, you can visit HMRC. 

What is the vat threshold?

The VAT threshold refers to the minimum level of annual turnover a business must reach before it’s required to register for VAT.  

If a business’s taxable turnover exceeds this threshold, it must charge VAT on its sales and may also reclaim VAT on its purchases. 

What is the vat threshold for 2025? 

The VAT threshold in the UK for 2025 is £90,000. This has increased from £85,000 in April 2024.

Is the VAT threshold reviewed every year?

Yes, the VAT threshold is reviewed annually in the UK. In the past, it typically increased each year, but there was a notable pause from 2017 to 2024 when it stayed the same.

Here’s how the VAT threshold has changed from 2014 to 2025: 

How to calculate how much VAT you owe

Let’s imagine you’re the proud owner of Glow & Co, a VAT-registered business that sells handmade candles in the UK.  

You’ve had a great month, and now it’s time to figure out how much VAT you owe HMRC. 

Step 1: work out your VAT on sales (output VAT)

This is the VAT you’ve collected from customers.  

Let’s say your total sales for the month were £10,000, and you charge the standard VAT rate of 20%. 

VAT collected = £10,000 × 20% = £2,000 

Step 2: work out your VAT on purchases (input VAT)

You can reclaim VAT on your business expenses.  

This month, you bought wax, wicks, jars, and packaging materials for £2,500, and the VAT included in those costs was 20%. 

VAT paid = £2,500 × 20% = £500 

Step 3: calculate the VAT you owe

To find out how much you need to pay HMRC, subtract your input VAT from your output VAT:

£2,000 (VAT collected) – £500 (VAT paid) = £1,500

This means you owe £1,500 in VAT to HMRC for the month. 

What if you paid more VAT than you collected? 

Let’s say in a quieter month you only made £3,000 in sales (£600 VAT collected) but had £4,000 in business expenses (£800 VAT paid).

£600 (VAT collected) – £800 (VAT paid) = -£200

In this case, HMRC would owe you £200, which you can reclaim as a VAT refund. 

Simplify and automate your business expenses with Capture Expense 

Our sophisticated app automatically applies the correct VAT rate, keeping your records accurate and fully compliant with HMRC—so you never have to worry about miscalculations. Book a personalised demo today to see Capture Expense in action. 

Getting your head around the nuances of travel expenses in Ireland can be tricky. It’s like trying to find your way through Dublin for the first time without Google Maps—confusing, frustrating, and if you’re not careful, it could end up costing you more than it should. 

But don’t worry, if you’re an employer in Ireland looking to reimburse your team for work-related travel, you’re in good hands. 

We’ll outline what qualifies as a travel expense in Ireland, when you can reimburse your employees, and how to report it to Revenue. 

What’s a travel expense in Ireland?

Travel expenses in Ireland refer to the costs incurred by an individual or business for work-related travel. These expenses can include:

• Transport costs (e.g., fuel, mileage for personal vehicle use, public transport fares, taxis, flights) 
• Accommodation (e.g., hotel stays for business trips) 
• Subsistence (e.g., meals and incidental expenses while travelling for work) 
• Tolls and parking fees  

For employees, travel expenses may be reimbursed by employers or claimed as allowable expenses for tax purposes, subject to Revenue’s guidelines.  

Reimbursement may be based on actual costs incurred or standard mileage/subsistence rates set by Revenue. 

When can you reimburse your employees for their travel expenses in Ireland?

You can reimburse your employees for travel expenses when they travel for work and the expense is incurred wholly, exclusively, and necessarily for business. 

This includes covering costs like transport, accommodation, and meals if they have to stay away from their usual workplace. If they use their own car, motorcycle, or bicycle for business travel, you can also compensate them based on mileage rates (see below). 

A quick example 

If one of your sales representatives needs to visit multiple client sites across the country, you can reimburse their train fares, hotel stays, and meals.  

Similarly, if an employee drives their own car to attend a conference on behalf of the company, you can cover their fuel costs based on the approved mileage rate. 

How to calculate the distance of a business trip in Ireland

To work out how far your employees travel for work, you’ll need to use the lower of either: 

• The distance between your employee’s home and the temporary place of work. 
• The distance between your employee’s normal place of work and the temporary place of work. 

A real–world scenario

Let’s say one of your employees (Carly) normally works in Dublin city centre but has to travel to Cork for a meeting. 

• The distance from Carly’s home in Bray to Cork is 250 km. 
• The distance from her normal office in Dublin to Cork is 220 km. 

Since the Dublin to Cork route is shorter, that’s the distance used for her travel calculation. 

The travel and subsistence rates in Ireland for 2025 

Now you know the when and how to reimburse your employees’ travel expenses in Ireland, let’s look at the how much. 

Thankfully, Revenue have set very clear guidelines when it comes to travel and subsistence in Ireland. 

Travel 

As we mentioned above, you can reimburse your employees for using their personal vehicles for business journeys. Don’t forget, this doesn’t include commuting from home to their normal place of work. 

You have the option to either reimburse the actual travel expenses incurred by the employee or provide a fixed mileage allowance per kilometre.  

Here are the civil service mileage rates for 2025. 

Subsistence  

When it comes to reimbursing your employees for subsistence expenses, you have three options: 

• Apply the civil service rates: this is the simplest option. You can reimburse your employees using the official civil service subsistence rates set by Revenue. These rates are pre-approved and tax-free.
  
• Set your own rates: alternatively, you can choose to set your own reimbursement rates, but they must not exceed the civil service rates.
• Reimburse actual expenses: another option is to reimburse your employees for the exact costs they incurred during their trip. 

What you need to know about ERR

Since January 1, 2024, new payment reporting rules, known as Enhanced Reporting Requirements (ERR), have come into effect. Here’s what you need to know: 

These rules, introduced under Section 897C of the Finance Act 2022, are designed to improve transparency in how businesses handle certain expenses. However, they also bring some compliance challenges that you’ll need to be aware of.

What needs to be reported 

You’ll need to report specific details about certain payments made to your employees: 

1. Small benefit exemption: you need to record the date the benefit was given and its value. 
2. Remote working daily allowance: report the total number of days covered, the amount paid, and the payment date. 
3. Travel & subsistence payments: for each payment, record the amount and date paid, under these categories: 

• Travel (both vouched and unvouched) 
• Subsistence (both vouched and unvouched) 
• Site-based employees (including ‘country money’) 
• Emergency travel 
• Eating on-site 

How do you report it? 

You must submit these details to Revenue at the time of payment or even before it’s made.  

Reports should be submitted via the Revenue Online Service (ROS), either manually or through your accounting/ERP software. 

Are you looking for a platform that can handle all your travel expenses in Ireland? 

With just a few taps, you can capture receipts, automate employee reimbursements, and effortlessly manage all your travel expenses in Ireland. Book a demo today to see Capture Expense in action.