Many questions about VAT on train tickets arise among businesses and self-employed individuals managing travel expenses. People often ask, “Is there VAT on train tickets?” when reviewing receipts and preparing VAT returns.
In the UK, train travel has certain VAT rules that can feel confusing if you are not familiar with them. Understanding VAT on train tickets and whether train travel is VAT exempt or zero-rated can help with accurate accounting.
In this article, we will discuss VAT on train tickets in detail, whether it can be reclaimed and other aspects.
Need help? Cheap Accountants in London are available to guide you more on a vat on train tickets in the UK. Stay in touch!
What is VAT and How Does it Work?
VAT (Value Added Tax) is a tax charged on the consumption of goods and services in the UK. It is generally applied at a standard rate of 20%, although some supplies are reduced to 5% or zero-rated.
Since train travel is a VAT-taxable service, it is zero-rated, meaning no tax is added to the final consumer price.
Is there VAT on Train Tickets, and Can You Reclaim It?
UK train tickets are zero-rated for VAT, meaning no VAT is charged on the fare itself. This applies to most public transport with a capacity of 10 or more passengers.
In the UK, you cannot reclaim VAT on train tickets because the standard passenger rail travel is zero-rated, meaning no VAT is charged on the fare.
Is there VAT on Public Transportation in the UK?
In the UK, VAT on train tickets and most forms of public transport are zero-rated. It means no VAT is charged on the ticket price. This applies to domestic passenger travel where the vehicle is designed to carry at least 10 passengers.
- Train travel in the UK is zero-rated, which means no VAT is charged.
- Generally, any public transport with a capacity of 10 or more passengers is zero-rated.
- While the ticket itself is zero-rated, premium, non-transport services such as access to first-class lounges may be standard-rated.
- As the VAT rate is 0%, there is no VAT to reclaim on train or bus travel, even for business purposes.
How do VAT Refunds Work for Travel Expenses?
There are specific VAT rules applied to travel expenses, which are described below:
Eligibility
You must be VAT-registered, and expenses must be incurred for business purposes. You cannot claim VAT on personal travel or commuting to a permanent workplace.
What You Can Reclaim
VAT can be reclaimed on items such as hotel stays, fuel for company vehicles, and taxi fares (if the driver is VAT-registered).
Business Entertainment
Generally, VAT on business entertainment (meals, drinks for clients) cannot be reclaimed.
Fuel Expenses
Reclaim the VAT only on fuel used for business mileage by keeping detailed, accurate records.
How to Account for VAT?
Since there is no VAT on train tickets, you cannot reclaim VAT on standard rail fares. These costs should be recorded as zero-rated rather than exempt, as they still form part of taxable turnover.
- When recording the expense, list the VAT amount as nil.
- Categorise the ticket purchase as “Zero-rated” in your accounting software (Xero, QuickBooks).
- Always keep your receipts for auditing, even though no VAT is recoverable.
- If you book through a travel agent, check if a separate booking fee applies, which might be standard-rated.
Which Travel Expenses Can You Claim VAT On?
If you are VAT-registered, you can typically reclaim VAT at 20% on the following, provided you have a valid VAT invoice.
Taxi Fares
These have a standard 20% VAT.
Fuel/Mileage
VAT can be claimed on petrol/diesel for business travel.
Accommodation
Hotels and B&Bs for business trips.
Subsistence
Reasonable food and drink during overnight business trips.
Parking
Only on off-street, commercial parking, as there is no VAT on on-street parking.
Which Types of Transports are Zero-Rated?
In the UK, a vehicle that can carry 10 or more passengers and the service is already available to the public on a set route is zero-rated.
- Train travel within the UK
- Bus and coach services run on scheduled public routes
- Domestic air travel on scheduled flights
- Ferries and hovercraft
- Trams and cliff lifts
- Park and ride schemes
Which Travel Expenses Can You Not Claim VAT on?
As discussed above, the value-added tax cannot be reclaimed if the travel purpose was personal, for entertainment, or zero-rated and also most of the public transport in the UK. Thus, VAT cannot be reclaimed on train, bus, and underground tickets. Moreover, you cannot reclaim VAT for air travel and congestion charges.
Is Train Travel Zero-Rated or Exempt?
In the UK, standard domestic train tickets are zero-rated for VAT. This means that while train travel is technically within the scope of VAT, the rate is applied 0%, so no VAT is added to the base fare. Ultimately, businesses cannot reclaim VAT on standard train tickets.
Bottom Line
In most cases, VAT on train tickets is zero-rated, meaning no VAT is charged on standard passenger rail fares. Since no VAT is charged, businesses cannot claim VAT on train tickets, even when the journey is for business purposes. This cost is still allowable as an expense, but there is no VAT to reclaim.
Once you understand the difference between VAT-exempt and zero-rated train travel, it helps ensure accurate bookkeeping and VAT compliance. Also, seek professional advice to avoid costly mistakes.
Reach out to one of our professionals to get to know about a vat on train tickets in the UK. Get in touch with us, and you will be provided instant professional help!
Disclaimer: This article intends to provide general information based on the vat on train tickets in the UK.
