If you’re VAT-registered in the UK, one of the main benefits is being able to claim VAT back on eligible business expenses.
But knowing what you can and can’t reclaim, and doing it correctly, is where many small business owners get tripped up.
In this beginner-friendly guide, we’ll explain what input VAT is, which purchases qualify, and how to make sure your claims are accurate and compliant.
What Is Input VAT?
Input VAT is the VAT you pay on goods and services that your business purchases.
If you’re VAT-registered and the expense is for business use, you can usually reclaim this VAT from HMRC on your VAT return.
For example:
- You buy a laptop for £600 + £120 VAT = £720 total.
- You can reclaim the £120 VAT (assuming 100% business use).
This is offset against the VAT you charge your customers (output VAT), reducing your VAT bill, or resulting in a refund if your input exceeds your output.
What Can You Claim VAT Back On?
You can generally reclaim VAT on goods and services that are:
- Used for business purposes only
- From VAT-registered UK suppliers
- Supported by a valid VAT invoice
Common examples include:
- Office supplies and equipment
- Software subscriptions
- Business travel and accommodation
- Tools and materials
- Telephone and internet bills
If an item is partly for personal use, you can only reclaim the business portion.
What You Cannot Reclaim VAT On
There are strict rules around what’s ineligible for VAT reclaims. These include:
- Business entertaining (e.g. client meals, events)
- Purchases from suppliers not registered for VAT
- Personal expenses (even if paid through the business)
- Company cars used privately (with exceptions)
- Goods used to make VAT-exempt supplies
Reclaiming VAT incorrectly can lead to penalties or repayment demands, so it’s vital to be clear.
At Legacy Figures Accountancy, we can look after your finances including your VAT. Want to learn more? Let’s have a chat.
What Makes a Valid VAT Invoice?
To reclaim VAT, you must have a valid VAT invoice that includes:
- Supplier’s name, address, and VAT number
- Invoice date and number
- Description of goods/services
- VAT rate and amount
- Total amount payable
For purchases under £250, a simplified invoice is allowed, but it must still show the VAT rate and amount.
How to Reclaim VAT on Your Return
When completing your VAT return (usually quarterly):
- Record input VAT in Box 4 of the return
- Keep digital records of all invoices (as per Making Tax Digital rules)
- Retain proof of payment and VAT details for six years
Most accounting software will automate this if you enter your purchase correctly. Ensure you review the entries before filing.
Special Rules to Watch Out For
Some VAT claims come with added rules:
- Mileage and fuel: You may need to use HMRC’s fuel scale charges
- Mobile phones: If used personally, only the business use is reclaimable
- Pre-registration expenses: You may claim VAT on items bought up to 4 years (goods) or 6 months (services) before registering, if still used in the business
What Happens If You Claim VAT You Shouldn’t?
If HMRC reviews your VAT return and finds incorrect claims, you may face:
- Repayment of the wrongly claimed VAT
- Interest charges
- Penalties for careless or deliberate errors
Staying accurate protects your business and keeps HMRC on side.
Final Thoughts: What’s Best for You and Your Business?
Reclaiming VAT can be a great way to recover costs and boost your cash flow—but only if done correctly. If you’re unsure whether an item is eligible, it’s better to check than to assume.
We’re here to help you get it right, every time.
If you have any questions or need some guidance, get in touch today for a friendly, no-obligation chat.
