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?  

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