Recovering VAT on hotel bills
If you’re asking yourself, “Can I claim VAT on hotel accommodation?”, the simple answer is yes. When trying to save money on business travel, people often overlook the easy win of recovering VAT on hotel rooms. Here, we’ll walk you through the basics of claiming up to 25% back on your hotel spend in the UK.Find out your vat refund for your next upcoming trip
Try out our VAT refund calculator to find out how much money you can save on business travel.What is the VAT treatment of Hotel bookings?
Hotels in the UK usually charge VAT (Value Added Tax) at the standard rate of 20%. Businesses can reclaim this VAT if the hotel booking was made as part of a business trip.Recovering VAT on hotel accommodation can be challenging, particularly when the hotel is booked through third-party booking websites like Expedia as these may not provide the necessary VAT invoice or receipt. Below, we address common questions about recovering VAT on hotel accommodation, including the key inquiry: "Is there VAT on hotel rooms?" Understanding the VAT implications can help your business reclaim eligible costs incurred during business trips to places like London, Northern Ireland, Germany, and Italy.Note: During the COVID-19 pandemic, the UK government introduced a short-term reduced rate of 5% to all suppliers of overnight accommodation, including hotels and similar establishments. This reduced rate no longer applies.Can our company recover VAT on UK accommodation?
Yes. If the hotel is in the UK and the nights booked are for business purposes, VAT can generally be reclaimed. However, nights booked for guest stays are not recoverable, and there are other exceptions and exemptions to consider.If your company is VAT registered in the UK, you can recover this through your UK VAT return that you file with HMRC.When you book a hotel through certain hotel booking websites and corporate travel managers, your company can easily miss out on this VAT recovery. This is due to the hotel booking website or corporate travel manager operating under the Tour Operators Margin Scheme (TOMS), a complex set of rules that make it impossible for your company to recover the VAT charged by the hotel. Since the hotel booking website or corporate travel manager can’t recover this VAT either, they will likely pass this cost on to your company.When would our company not be charged VAT on accommodation?
When considering a UK-based hotel, the short answer is never. If you don't see VAT on your invoice or don’t receive one, it doesn't mean VAT isn't included in the cost. Instead, it may be that the booking website operates under TOMS, which prohibits VAT from being itemized on the invoice, while your company still effectively pays the 20% VAT rate. What does our company need to recover the VAT on hotels in the UK?
To recover the VAT, you’ll need a valid VAT invoice from the hotel made out to your company. This can be challenging, as the traveler must remember to collect the invoice during check-in or checkout—a step often overlooked. Without this invoice from the hotel, your company misses out on the chance to reclaim the VAT.It can also be difficult to determine if the invoice or bill you receive is valid for VAT recovery.Can I recover VAT charged in other countries?
Your company can reclaim VAT on hotel accommodations in countries outside the UK, potentially reducing costs by 5% to 25%. VAT is also recoverable on other travel-related expenses (e.g. meals, fuel, etc). However, foreign VAT is not recovered through the company’s UK VAT return, but through a different process called Electronic VAT refund (EVR). This process still involves submitting a claim for the VAT through HMRC, and there are strict deadlines to adhere to. For more information, you can refer to the HMRC website for details.?)
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