A VAT-registered limited company gets back the VAT it pays on business costs through its VAT return, by putting that VAT in box 4. If you missed some, you can still claim it up to four years later. You can also reclaim VAT on goods you bought before registering, as long as you still have them.

The timing matters as much as the tax. Your VAT bill is due one calendar month and seven days after the quarter ends, whether or not your customers have paid you. If you're owed money instead, HMRC usually repays it within 30 days of getting your return (HMRC: VAT repayments).

VAT has a lot of exceptions, and HMRC expects you to get your return right. If you're not sure whether a cost qualifies, check with your accountant before you file. This guide covers the general rules, not your company's own position.

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How far back can you reclaim VAT?

Up to four years for VAT you forgot to claim. For things you bought before you registered, it's four years for goods you still have and six months for services.

You claim pre-registration VAT on your VAT return once you're registered. It has to relate to the sales of the company that's now registered (HMRC: reclaim VAT on business expenses). The four-year limit for missed claims and mistakes comes from VAT Notice 700/45. It doesn't protect deliberate mistakes: HMRC can go back further on those.

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Who can reclaim VAT?

Only VAT-registered businesses. Your company must register if its VAT taxable turnover went over £90,000 in the last 12 months, or will go over £90,000 in the next 30 days alone.

The threshold went up from £85,000 to £90,000 on 1 April 2024 (HMRC: increasing the VAT registration threshold). You can also choose to register below it, which means you can start reclaiming VAT on your costs (HMRC: register for VAT).

If your company isn't registered, the VAT you pay simply stays part of your costs. Here's how to register for VAT.

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How to reclaim VAT on your VAT return

Your VAT return sets two numbers against each other. Box 3 is the VAT you charged your customers. Box 4 is the VAT you paid on business purchases, which is the VAT you're reclaiming. If box 3 is bigger, you pay HMRC the difference. If box 4 is bigger, HMRC pays you.

1. Check each purchase. It needs to be for your business and linked to sales you charge VAT on.
2. Keep a valid VAT invoice. It should show the supplier's VAT number and the VAT as a separate amount.
3. Add up the VAT you paid and put it in box 4 of your next return. Most companies file every three months.
4. Submit your VAT return through software that works with Making Tax Digital for VAT, HMRC's system for filing digitally. All VAT-registered businesses should now be signed up.
5. Pay or get paid. Pay the difference if box 3 is bigger, or wait for a repayment if box 4 is bigger.
6. Keep your records for at least six years (VAT Notice 700/21).

To find the VAT inside a price that includes 20% VAT, divide the total by 1.2. HMRC's own example: a table that costs £180 including VAT is £150 before VAT, so you reclaim £30 (HMRC: charge, reclaim and record VAT). For the 5% reduced rate, divide by 1.05.

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What can a limited company reclaim VAT on?

Most things your company buys to run the business and make its sales, as long as you have a valid VAT invoice. If something is partly for personal use, you reclaim only the business share.

HMRC's example of a business share: if half the calls on a company phone are personal, you reclaim half the VAT on the phone and its plan. You can reclaim VAT on staff travel you pay for, but not if you pay staff a flat allowance instead (HMRC: reclaim VAT on business expenses).

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What you can't reclaim VAT on

Anything for personal use, entertaining clients, and costs linked to VAT-exempt sales. Two less obvious ones are second-hand goods bought under a margin scheme, where VAT is charged only on the dealer's margin, and assets that came with a business you bought as a going concern, where the sale usually has no VAT on it.

Entertainment is the one that catches companies out most. Free hospitality for people who aren't your staff, such as theatre tickets or meals for UK clients, is blocked. Entertaining overseas customers isn't restricted in the same way. HMRC's definition of business entertainment sets out what counts. And if some of your sales are exempt from VAT, you can't reclaim the VAT on costs linked to them.

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Cars, vans and fuel

You can usually reclaim VAT on a van. On a car, you can only if it's used for business and nothing else.

• Cars: you reclaim the full VAT only if there's no personal use at all, and that includes commuting. Taxis, driving-school cars and self-drive hire cars are the exceptions.
• Hired cars: usually 50% of the VAT on a car hired to replace a company car that's off the road. If you hire a car only for business for up to 10 days, you can reclaim all of it.
• Fuel: all of it for a vehicle used only for business. If the vehicle is also used personally, either reclaim it all and pay HMRC's fuel scale charge, a fixed amount based on the car's emissions, or keep mileage records and reclaim only the business share.
• Running costs: you can reclaim VAT on repairs, maintenance and business accessories, even when the VAT on the car itself is blocked.

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Schemes that change what you can reclaim

If your company uses one of these, the usual rules change.

• Flat Rate Scheme: you pay HMRC a fixed percentage of your turnover instead of working out the VAT on each sale and purchase. In return, you can't reclaim VAT on purchases, except on certain capital assets over £2,000.
• Partial exemption: if some of your sales are taxable and some are exempt, you reclaim only the share of VAT linked to the taxable ones. HMRC's partial exemption rules set out how to work it out.
• Capital Goods Scheme: for business assets of £50,000 or more, the VAT you reclaim is adjusted over several years.

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How to claim VAT you missed or overpaid

Small mistakes go on your next VAT return. That covers a net error of £10,000 or less, or up to £50,000 if it's no more than 1% of the sales figure in box 6. Anything bigger, or anything deliberate, you report to HMRC separately.

The old form VAT652 isn't used any more: HMRC withdrew it on 8 September 2025 (HMRC: check how to tell HMRC about VAT Return errors). The same four-year limit applies to VAT you missed, such as an invoice that arrived after you filed.

Getting a claim wrong can be more costly than being late. HMRC can charge penalties for careless or deliberate mistakes, and it treats a mistake you find but don't fix as careless. So if something on a past return looks wrong, correct it promptly, and ask your accountant if you're not sure how. If a supplier charged you VAT by mistake, ask the supplier for the money back, not HMRC (VAT Notice 700/45).

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How long does a VAT repayment take?

Usually 30 days from when HMRC gets your return. It pays straight into your bank account if it has your details. Checks can take longer, and HMRC may owe you interest if it pays late.

• Most repayments happen automatically when box 4 is bigger than box 3. Box 5 shows the amount.
• HMRC may ask for more information before it pays. Reply quickly, because the repayment can take longer than 30 days while it checks.
• Track it in your HMRC business tax account. If there's no update or contact within 30 days, you can call HMRC (HMRC: VAT repayments).
• Repayment interest may be due if HMRC is late paying you (HMRC: repayment interest).

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VAT on exports and imports

Goods you export from Great Britain to outside the UK are zero-rated: you charge 0% VAT. You still reclaim the VAT on your own costs, on your normal return, with no separate form. Import VAT usually goes on the same return too.

• Exports: charge 0% VAT and keep proof the goods left the UK (VAT Notice 703). The VAT on your costs still goes in box 4. Because you charge none on the sale, HMRC may owe you money.
• Imports: with postponed VAT accounting, you declare and reclaim import VAT on the same return, so you don't pay it upfront at the border (HMRC: account for import VAT on your VAT return).
• Form VAT65A is only for businesses registered outside the UK that want UK VAT back (HMRC: VAT65A). A UK-registered company doesn't need it.

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Planning cash flow around a VAT quarter

Your VAT bill is due one calendar month and seven days after the quarter ends, whether or not your customers have paid. So the first step is to work out whether there's a gap. Then you can decide whether to pay from cash, ask HMRC for time or use short-term finance.

Here's an illustrative example of how that gap can open up. The figures are made up to show the arithmetic.

You have three main ways to cover a gap like this:

• Pay from cash if you can, and build next quarter's VAT into your forecast. The VAT you charge customers was never yours to spend.
• Ask HMRC for time. If you can't pay your VAT bill in full, HMRC may agree a VAT payment plan if it's affordable. Contact HMRC before the deadline (HMRC: if you cannot pay your tax bill on time).
• Use short-term finance to bridge the days in between.

A large VAT bill can leave less cash for salaries and suppliers in the same weeks. An iwoca Flexi-Loan, a business loan with flexible repayment options, lets the company in the example borrow £7,000 on 7 November and repay it when its customers pay. Interest is charged only on what you owe, there's no fee for repaying early, and you'll get a decision within 24 hours, but it might be longer depending on the complexity of the request. We lend to UK limited companies, and every new Flexi-Loan needs a personal guarantee from at least one director. Finance isn't the right fit if the gap won't close when customers pay, or if VAT leaves a gap every quarter: then it's worth talking to your accountant about the underlying cash flow first.

Guy Walker, founder of recruitment business Dovetail and Slate, used a Flexi-Loan to bridge VAT, salaries and suppliers over the summer:

"iwoca was different. There were no pushy salespeople. They were clear about the model, the amount, the payment structure, and the interest. I didn't even need to involve my finance team, which never happens with lending."

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Claiming VAT FAQs

Do I need a VAT invoice to reclaim VAT?

Yes. You need a valid VAT invoice for each purchase, and you must keep your records for at least six years. If the invoice arrives after you've filed, claim the VAT on a later return, within four years.

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What's the difference between a VAT repayment and a VAT refund?

A VAT repayment is what HMRC pays you when your return shows you paid more VAT on purchases than you charged on sales. A refund is money back for VAT you paid HMRC by mistake, which you claim by correcting the mistake.

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Can I reclaim VAT if my supplier charged it wrongly?

Not from HMRC. If a supplier charged you VAT that wasn't due, ask the supplier for a refund. The supplier then corrects its own VAT return.