What to do next
General information only. Not tax advice. Check HMRC guidance for your situation.
Key points
- You must be VAT registered to reclaim VAT.
- There is no minimum “refund threshold”: if the VAT you can reclaim is more than the VAT you charged, HMRC repays the difference.
- You can reclaim VAT on eligible business expenses only, and you need a valid VAT invoice (check the supplier’s number with our VAT number checker).
- If you’re not registered, VAT is just part of your cost.
How a VAT refund works
On each VAT return you report the VAT you charged customers (output tax) and the VAT you paid on business purchases (input tax). If input tax is bigger, the return shows a repayment and HMRC pays it into your bank account, usually within about 10 days of receiving the return, unless they need to check it first.
Businesses that are usually in repayment, for example because they sell mostly zero-rated goods, can ask to submit monthly returns to get refunds sooner.
Reclaiming VAT from before you registered
| What you bought | How far back | Condition |
|---|---|---|
| Goods | Up to 4 years | You still have them (or they were used to make goods you still have) |
| Services | Up to 6 months | Bought for the business you registered |
You claim these on your first VAT return. Keep the invoices and a list of what you’re claiming.
How far back can you claim VAT?
| Situation | Time limit |
|---|---|
| VAT you forgot to claim on a past return (input tax) | Up to 4 years after the end of the VAT period it belongs to |
| Correcting an error on a past VAT return | Up to 4 years after the end of that period |
| Goods bought before you registered | Up to 4 years before registration, if you still have them |
| Services bought before you registered | Up to 6 months before registration |
You can usually put missed VAT or errors right on your next VAT return if the net value is £10,000 or less, or up to £50,000 and under 1% of your sales. Bigger (or deliberate) errors must be reported to HMRC separately.
When you can’t reclaim, or only partly
- Mixed use: for things used partly privately, you can only reclaim the business share.
- Business entertainment: VAT on entertaining clients usually can’t be reclaimed.
- Cars: VAT on buying a car usually can’t be reclaimed unless it’s used only for business (for example a taxi or driving school car). VAT on leasing is usually 50% reclaimable.
- Exempt supplies: if you make exempt sales, VAT on related costs may be restricted (partial exemption).
- Flat Rate Scheme: you generally can’t reclaim VAT on purchases, except some capital assets over £2,000.
VAT refunds for visitors to the UK
If you’re a tourist looking for a VAT refund on shopping: tax-free shopping in Great Britain ended on 1 January 2021, so visitors can no longer reclaim VAT on goods bought in shops and taken home. Retailers can still sell VAT-free if they post the goods directly to an address outside the UK.
FAQ
How far back can you claim VAT?
Usually up to 4 years. You can claim VAT you missed, or correct errors, for up to 4 years after the end of the VAT period. Before registration, you can reclaim VAT on goods from up to 4 years earlier (if you still have them) and services from up to 6 months earlier.
Is there a minimum amount for a VAT refund?
No. If your reclaimable VAT is more than the VAT you charged in a period, HMRC repays the difference whatever the amount.
Can I reclaim VAT if I’m not VAT registered?
No. Only VAT-registered businesses can reclaim VAT. If you register later, you may be able to reclaim VAT on goods bought up to 4 years earlier that you still have, and services bought up to 6 months earlier.
Is it worth registering for VAT voluntarily to get refunds?
It can be if you have high VAT costs, sell mostly to VAT-registered businesses who can reclaim the VAT you charge, or make zero-rated sales. If you sell to consumers, adding 20% VAT to your prices can cost you more than you reclaim.