We are often asked by clients what VAT is applied to public transport, and what they can claim back on their VAT returns as input VAT. The short answer is, usually nothing.
Trains and buses
Trains and public buses are zero rated for VAT purposes. This means that although they do have VAT applied to them, it is at 0% so there is no VAT amount payable or reclaimable.
This also applies to public tram and tube systems. If you are travelling in London for example, journeys on the underground and over ground networks, as well the Docklands light railway, are all zero rated for VAT.
Private buses and coaches may have VAT applied to them, but that will depend on whether or not the operator is VAT registered. You should receive a VAT invoice or receipt if VAT has been applied in order for you to reclaim it.
Whether or not VAT is applied to taxis depends on if the operator is registered for VAT, but if it is then VAT is chargeable at the standard rate of 20%. Big firms like Uber are definitely VAT registered, but smaller firms or one man operators may not have met the £85k registration threshold to charge it. It’s best to ask for a receipt for your journey which will show you if VAT has been applied and how much you can claim back.
VAT on flights often confuses people as they will have received a receipt showing a tax amount. However, this is airport tax, not VAT and is not reclaimable on a VAT return. However, it will be considered part of the expense so you will be able to claim it as a business expense against your income tax or corporation tax if you are a company.