Can VAT Be Reclaimed on Trivial Benefits?

VAT can be reclaimed on trivial benefits if:

• You hold a valid VAT invoice.
• The invoice includes the supplier’s VAT number.

However, any benefit provided under salary sacrifice is not exempt under trivial benefit rules. These items are subject to tax, must be reported on Form P11D.

• The benefit is subject to taxation and must be reported on Form P11D or processed through payroll.
• The employer is required to account for Output VAT on the value of the foregone salary, thereby negating any potential VAT reclaim on the original expenditure.