Reclaiming VAT: what you can and cannot claim
You can reclaim VAT on goods and services bought for your VAT-registered business, provided you hold a valid VAT invoice. Business entertainment and most cars are blocked entirely. Costs used partly privately must be apportioned, and you can reclaim on some purchases made before you registered.
The basic conditions
The purchase must be for your business, you must hold a valid VAT invoice showing the supplier's VAT number, and the supply must be one you are allowed to recover on.
A till receipt is sufficient for purchases under £250 including VAT, as long as it shows the supplier's VAT number and the rate. Above that you need a full VAT invoice. A bank statement is never enough on its own.
What is blocked
| Cost | Position |
|---|---|
| Business entertainment | Blocked entirely, except entertaining overseas customers |
| Staff entertainment | Recoverable, within reason |
| Cars bought outright | Blocked unless used exclusively for business, a very high bar |
| Leased cars with private use | 50% recoverable |
| Commercial vehicles and vans | Fully recoverable if used for business |
| Fuel with private use | Reclaim in full and pay the fuel scale charge, or apportion with mileage records |
| Goods for personal use | Blocked, or apportioned if mixed |
The car block is stricter than people expect. "Available for private use" is enough to block it, even if no private journeys are actually made, which is why almost no ordinary company car qualifies.
Pre-registration VAT
You can recover VAT incurred before registration, which is often a useful lump sum on a first return.
Goods: up to four years before registration, provided you still hold them or they form part of goods you still hold. Equipment, stock and tools typically qualify.
Services: up to six months before registration. Accountancy, legal fees and website build often fall in here.
Mixed business and private use
Apportion on a fair and reasonable basis and keep a note of how you worked it out. A mobile phone used 70% for business recovers 70% of the VAT.
For working from home, apportion by rooms or by time, and be consistent year to year. HMRC rarely argues with a sensible method applied consistently; it does argue with a number that appeared from nowhere.
This guide is general information, current at 10 November 2026. Tax rules change and depend on your circumstances. Please take advice before acting on it.