Reclaiming VAT on purchases: what qualifies
What you can and cannot reclaim VAT on
You can only reclaim input VAT on purchases made for the purpose of the business, where you hold a valid supplier VAT invoice. Purchases that are personal, or only partly for business, fall outside this, and some categories are blocked by law regardless.
What you can reclaim
- Office supplies, equipment, and consumables used in the business
- Software, IT costs, and cloud subscriptions (with the correct reverse charge code for overseas suppliers)
- Professional fees from UK VAT-registered suppliers
- Business travel: hotels, car hire (excluding private use), parking
- Business telephone and broadband
What you cannot reclaim
- Client entertainment: completely blocked, no exceptions
- Motor cars with any element of private use: blocked (vans and commercial vehicles are fine)
- Personal purchases paid through the company
💡 Good to know: We configure a Client Entertainment account in Xero with a blocked VAT code during setup. All entertainment costs coded there have input VAT excluded automatically. Do not use a general Entertaining account for client meals.
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