You can reclaim VAT on employee travel expenses for business trips, including meals and accommodation that you pay for.
You can’t reclaim VAT if you pay your employees a flat rate for expenses.
There are special rules for motoring expenses.
You can’t reclaim VAT on entertainment costs.
Who counts as an employee
The following people count as employees for VAT reclaims:
- someone directly employed by you, ie not through an agency
- directors, partners, any other managers
- self-employed people who are treated as employees (you can’t reclaim on travel expenses for this group)
- helpers or stewards who help run events
The following people don’t count as employees for VAT reclaims:
- shareholders who aren’t employed by the business
- pensioners and former employees
- someone applying for a job, eg interviewees