What determines your VAT refund amount
Your VAT refund depends on three things: the VAT rate that was charged on your purchase, whether you're registered for VAT, and whether the purchase falls into a category that allows refunds. The standard VAT rate in the UK is 20%, but some goods and services are charged at 5% (energy, children's car seats) or 0% (most food, books, newspapers). You can only reclaim VAT you've actually paid—the amount shown separately on your receipt or invoice.
If you're a UK business registered for VAT, you reclaim VAT on purchases related to your business through your VAT return. If you're a visitor to the UK, you may be able to reclaim VAT on goods you take out of the country, but not on services or goods you consume here. The refund is always calculated on the VAT amount charged, not the total price.
Key Takeaways
- The amount you can reclaim is the VAT shown on your receipt—usually 20% of the pre-VAT price, though some items are charged at 5% or 0%.
- UK businesses registered for VAT reclaim through their quarterly VAT return, not as a separate refund request.
- Visitors to the UK can reclaim VAT on goods they export, but the retailer must be part of a VAT refund scheme and you must leave the UK within three months of purchase.
- The refund amount is reduced by a handling fee, which varies by retailer and refund scheme—typically between 15% and 25% of the VAT owed.
- You cannot reclaim VAT on services, accommodation, car hire, or goods you consume in the UK, regardless of your status.
How VAT refunds work for UK businesses
If your business is registered for VAT, you don't receive a refund cheque for each purchase. Instead, you record the VAT you've paid on business purchases (called input tax) on your VAT return form, which you file every three months to HMRC. You offset this against the VAT you've charged customers (called output tax). If input tax exceeds output tax, HMRC sends you a refund—usually within 30 days of submitting your return, though it can take longer if HMRC needs to verify your claim.
The amount you reclaim must be on invoices from VAT-registered suppliers. You cannot reclaim VAT on purchases from unregistered traders, even if they've charged it. You also cannot reclaim VAT on certain business expenses like entertainment, vehicle fuel (though you can reclaim on electricity for charging), or goods for personal use.
VAT refunds for visitors leaving the UK
If you're a non-UK resident visiting the country, you can reclaim VAT on goods you buy and take out of the UK, but only if the retailer is part of a VAT refund scheme. The most common schemes are Global Blue, Planet, and Refunds Group. You must make the purchase, leave the UK within three months, and export the goods unused. The retailer will give you a form to complete at the point of sale.
The refund amount is the VAT charged (usually 20%), minus a handling fee. This fee is set by the refund scheme and the retailer, and typically ranges from 15% to 25% of the VAT owed. So if you buy something for £100 plus £20 VAT, and the handling fee is 20%, you'll receive approximately £16 (the £20 VAT minus £4 fee). You claim the refund at the airport or port when you leave, either in cash or back to your card, depending on the scheme.
Calculating your refund with handling fees
The formula is straightforward: take the VAT amount on your receipt, multiply it by the percentage the refund scheme charges as a fee, and subtract that from the VAT. Most schemes charge between 15% and 25%, though some charge a flat fee instead.
| Purchase price (inc. VAT) | VAT at 20% | Handling fee (20% of VAT) | Refund you receive |
|---|---|---|---|
| £100 | £16.67 | £3.33 | £13.34 |
| £250 | £41.67 | £8.33 | £33.34 |
| £500 | £83.33 | £16.67 | £66.66 |
The handling fee varies by retailer and scheme, so ask at the till what fee applies before you complete the form. Some high-street stores advertise "fee-free" refunds, but this is rare. The fee is deducted by the refund scheme, not by the retailer, so you cannot negotiate it away.
What you cannot reclaim VAT on
VAT refunds do not explore to services—only to goods. This means you cannot reclaim VAT on hotel stays, restaurant meals, flights, car hire, or haircuts, even if you're a visitor. You also cannot reclaim on goods you consume in the UK, such as food you eat here or petrol you put in your car before leaving. The goods must be exported unused and in their original condition.
Some goods are also excluded from visitor refunds even if they're goods rather than services. These include vehicles, motorcycles, and goods you've already used or modified. Alcohol and tobacco have special rules—you can reclaim the VAT, but there are limits on the quantity you can export without paying duty.
Timelines for receiving your refund
For UK businesses filing VAT returns, refunds typically arrive within 30 days of HMRC receiving your return, though HMRC can take up to 60 days if they need to check your claim. If you file online, the process is usually faster. If HMRC suspects an error or wants to verify your invoices, the refund can be delayed by several months.
For visitors claiming at the airport or port, you receive the refund when ready—either in cash or credited back to your card on the spot. If you claim by post after leaving the UK, it takes 4 to 12 weeks depending on the refund scheme. Refunds to your card are usually faster than cheques sent by post.
Frequently Asked Questions
Can I reclaim VAT on a purchase if I don't have the receipt?
No. HMRC and refund schemes require the original receipt or invoice showing the VAT amount. Without it, you have no proof of what you paid or that VAT was charged. If you've lost the receipt, contact the retailer to ask if they can issue a duplicate.
Do I get the full VAT amount back as a visitor?
No. The refund scheme deducts a handling fee before you receive the money, typically 15% to 25% of the VAT owed. So on £20 VAT with a 20% fee, you receive £16, not £20. The fee varies by retailer and scheme, so check before you buy.
What if I buy something as a visitor but don't leave the UK within three months?
You cannot claim a refund. The three-month rule is strict—you must export the goods and leave the country within that window. If you stay longer or decide to keep the goods, you've forfeited the refund.
Can I claim VAT back on a business purchase if the supplier isn't VAT registered?
No. You can only reclaim VAT on invoices from VAT-registered suppliers. If the supplier is unregistered, no VAT refund is possible, even if they've charged you VAT on the invoice.
How long does HMRC take to process a business VAT refund?
Usually 30 days from the date they receive your return, but it can extend to 60 days if they need to verify your claim. If HMRC suspects an error or wants to inspect your invoices, the refund can be delayed by several months. Filing online speeds up the process.