VAT Checklist for Staff Expenses

VAT Checklist for Staff Expenses | UK VAT Reclaim Guide

A practical guide for VAT-registered businesses reclaiming VAT on staff expenses

Reclaiming VAT on staff expenses is a common area where UK businesses make costly mistakes. HMRC will only allow VAT recovery where strict conditions are met — and recent changes (including Uber and taxi VAT rules) make this even more important.

This VAT checklist helps VAT-registered businesses, finance teams and directors ensure staff expenses are VAT-compliant, reclaimable and correctly recorded.

Can you reclaim VAT on staff expenses?

You can only reclaim VAT on staff expenses if:

VAT has actually been charged
You hold a valid VAT receipt or invoice
The expense relates to business activity
The expense is not specifically blocked by HMRC

If any one of these conditions is not met, VAT cannot be reclaimed.

1. Has VAT been charged?

✔️ Check the receipt shows VAT
✔️ VAT must be shown separately or clearly included

Important:
If no VAT is shown, there is no VAT to reclaim — even if the expense is wholly business-related.

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2. Is it a valid VAT receipt or invoice?

To reclaim VAT, the receipt must include:

Supplier’s name
Supplier’s VAT registration number
Date of supply
Description of goods or services
Total amount paid
VAT amount or VAT rate

For purchases £25 or less (including VAT), a simplified VAT receipt is acceptable.

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3. Is the expense eligible for VAT recovery?

Common staff expenses where VAT is usually reclaimable

Business travel (train, taxi, Uber if VAT charged)
UK hotel accommodation
Subsistence while travelling for work
Parking charges (excluding penalties)

Expenses where VAT is not reclaimable

Client entertaining
Fines and penalties (including parking tickets)
Personal or private expenses
Expenses without valid VAT receipts

4. Uber, taxis and private hire – VAT check

VAT treatment now varies depending on location and receipt details:

London Uber journeys – VAT is usually charged and may be reclaimed
Outside London – VAT is often not charged, so nothing can be reclaimed
Always check the receipt — do not assume VAT applies

VAT recovery depends on what is shown on the receipt, not whether the business is VAT-registered.

5. Was the expense wholly for business purposes?

✔️ Confirm the expense relates to business activity

If partly private:

Private use must be identified
VAT can only be reclaimed on the business portion

6. Has the correct VAT rate been applied?

Check whether the expense is:

Standard-rated (20%)
Zero-rated
Exempt

If the supply is zero-rated or exempt, no VAT can be reclaimed.

7. Has the expense been recorded correctly?

✔️ Receipt uploaded or retained
✔️ VAT coded correctly in accounting software
✔️ Included in the correct VAT return period
✔️ Not reclaimed more than once