Do I charge VAT on my expenses billed to my client?
If you are VAT registered you must ensure that VAT is charged on all your billable expenses, even if you did not incur VAT yourself.
Here are some examples of expenses and their typical treatment of VAT when billing a client:
- Hotel stays – normally standard rate VAT. You bill your client exactly what you paid which includes VAT.
- Train tickets – public transport is zero rated. You charge your client what you paid but you will add 20% VAT.
- Flights – VAT can be complicated on flights but generally they are zero rated. You charge your client what you paid but you will add 20% VAT.
- Mileage – if you’ve negotiated a rate of 45p per mile with your client, you will charge for the number of mileage times the rate and you’ll add 20% VAT.
In general VAT must always be charged but you must not charge VAT on top of VAT. If you didn’t incur VAT on the expense, you charge VAT. If you incurred VAT on the expense, you don’t charge it again.