Is There VAT on Flights?

As a chartered accountant running my own firm, I am asked surprisingly often whether VAT applies to flights. It usually comes up when a business owner is reviewing travel expenses, preparing a VAT return, or trying to understand why there is no VAT to reclaim on airline tickets. From the outside, flights feel like a standard purchase, so it seems logical to expect VAT to apply. In reality, the VAT treatment of flights is quite different from most other services.

In this article, I want to explain clearly and practically whether VAT applies to flights, why the rules exist, how domestic and international flights are treated, what this means for VAT registered businesses, and where people commonly get confused. I will also cover related costs such as baggage fees, seat selection, airport charges, and travel booked through agents.

This is written exactly how I explain it to clients, using UK rules, real world examples, and plain English rather than technical jargon.

The short answer, is there VAT on flights

In most cases, no, there is no VAT charged on flights.

Passenger transport by air is generally zero rated for VAT in the UK. This applies to both domestic flights within the UK and international flights, subject to specific conditions.

Zero rated does not mean outside the VAT system. It means VAT applies at a rate of 0 percent.

That distinction matters, especially for VAT registered businesses.

Why flights are zero rated for VAT

The UK VAT system zero rates passenger transport for policy and practical reasons.

The main reasons are:

• To avoid increasing the cost of essential transport

• To ensure consistency across international travel

• To prevent competitive distortion between UK and overseas carriers

If VAT were charged on flights, it would significantly increase ticket prices and create complexity for international journeys involving multiple countries.

Zero rating simplifies the system and keeps air travel competitive.

Zero rated does not mean VAT exempt

This is an important distinction that causes confusion.

Flights are zero rated, not VAT exempt.

That means:

• VAT applies at 0 percent

• The supply is still taxable for VAT purposes

• Airlines make taxable supplies

• Zero rated sales count as taxable turnover

For passengers and businesses buying flights, the practical result is that no VAT is charged on the ticket.

Domestic flights within the UK

Domestic passenger flights within the UK are zero rated for VAT.

This includes flights such as:

• London to Manchester

• Birmingham to Edinburgh

• Belfast to London

Even though these journeys take place entirely within the UK, VAT is still charged at 0 percent.

This often surprises people, as many expect domestic transport to be standard rated.

International flights and VAT

International flights are also zero rated for VAT.

This includes:

• Flights from the UK to overseas destinations

• Flights from overseas destinations to the UK

• Connecting international journeys

The zero rating applies regardless of whether the destination is in Europe or elsewhere in the world.

What this means for VAT registered businesses

For VAT registered businesses, the key point is this.

If there is no VAT charged on a flight, there is no VAT to reclaim.

This is why airline tickets usually show no VAT element, and why flights do not appear in the input VAT box on a VAT return.

Businesses often assume VAT must be hidden somewhere in the ticket price. It is not. The supply is zero rated.

Can you reclaim VAT on flights

In almost all cases, no.

Because flights are zero rated, there is no VAT charged, and therefore nothing to reclaim.

This applies whether:

• The flight is for business purposes

• The traveller is an employee or director

• The business is fully VAT registered

• The flight is domestic or international

The lack of reclaimable VAT is not a restriction. It is simply because VAT was never charged.

Flights booked through travel agents

Booking a flight through a travel agent does not usually change the VAT position of the flight itself.

The flight remains zero rated.

However, the travel agent may charge a booking fee or service fee.

VAT treatment here is different.

• The flight element is zero rated

• The agent’s service fee is usually standard rated

• VAT may be reclaimable on the service fee if the business is VAT registered

This distinction is often missed when reviewing travel invoices.

VAT on airline extras and add ons

While the flight itself is zero rated, some additional charges may carry VAT.

Examples include:

• Booking fees charged by agents

• Administration fees

• Change or amendment fees

• Some ancillary services provided separately

These charges are often standard rated and may include VAT that a VAT registered business can reclaim.

It is important to review the invoice carefully rather than assuming everything is zero rated.

VAT on baggage fees and seat selection

In many cases, baggage fees and seat selection charges are treated as part of the passenger transport supply and are zero rated along with the flight.

However, the treatment can vary depending on how the airline structures and invoices the charges.

If these items are separately invoiced or treated as distinct services, VAT may apply.

In practice, most mainstream airlines treat these as part of the zero rated transport.

VAT on airport taxes and charges

Airport taxes and government imposed charges are not VAT in the first place.

They are statutory charges passed on to the passenger and do not attract VAT.

This is another reason why airline tickets often look complicated, with multiple lines but no VAT.

VAT on charter flights and private jets

Charter flights and private aviation introduce more complexity.

Passenger transport can still be zero rated, but other elements may be taxable.

Factors that affect VAT treatment include:

• Whether the flight is for passenger transport or hire

• Whether the aircraft is crewed

• Whether the service is transport or leasing

• The route and destination

In these cases, specialist VAT advice is often required.

VAT on freight and cargo flights

Cargo transport by air is also generally zero rated.

This includes:

• International freight transport

• Domestic freight transport in many cases

The VAT treatment of freight follows similar principles to passenger transport, although documentation requirements can differ.

Flights compared to other travel expenses

Flights often feel inconsistent when compared to other travel costs.

For example:

• Hotels are usually standard rated

• Taxis often include VAT

• Car hire is standard rated

• Parking often includes VAT

This leads people to assume flights should also include VAT. The difference is down to specific VAT legislation for passenger transport.

VAT on flights and subsistence

Flights are often part of wider subsistence and travel claims.

While there is no VAT to reclaim on the flight itself, there may be VAT on:

• Hotel accommodation

• Taxis

• Parking

• Meals during overnight stays

It is important to separate zero rated items from standard rated ones when preparing VAT returns.

How flights appear on a VAT return

Flights typically do not appear in the input VAT box on a VAT return because there is no VAT to reclaim.

They still appear in the accounts as an expense, but they do not affect the VAT calculation.

This often causes confusion when reconciling travel costs to VAT returns.

Flights and the Flat Rate Scheme

Under the VAT Flat Rate Scheme, VAT on most expenses cannot be reclaimed anyway.

However, the zero rated status of flights means:

• There is no VAT to reclaim under standard VAT

• There is no difference under the Flat Rate Scheme

Flights simply sit outside the reclaimable VAT picture altogether.

Common mistakes I see with VAT and flights

In practice, I see the same misunderstandings repeatedly.

These include:

• Assuming VAT is hidden in flight prices

• Trying to reclaim VAT where none exists

• Confusing agent fees with flight costs

• Assuming international flights are outside VAT altogether

• Incorrectly coding flights as exempt rather than zero rated

While these errors rarely lead to penalties, they can cause confusion and incorrect VAT returns.

Flights, VAT, and accounting software

Many accounting systems automatically treat flights as zero rated.

This is usually correct.

Problems arise when:

• Invoices are coded incorrectly

• Agent fees are not separated

• VAT is assumed where none exists

Good bookkeeping avoids unnecessary questions later.

Why HMRC rarely challenge VAT on flights

Because flights are clearly zero rated, HMRC rarely challenge the VAT treatment of airline tickets themselves.

Instead, they focus on:

• Agent fees

• Mixed travel invoices

• Incorrect VAT reclaims

• Subsistence linked to travel

Flights are usually the simplest part of the travel VAT picture.

Final thoughts from real world experience

So, is there VAT on flights. In most cases, no, there is not. Flights are zero rated for VAT, meaning VAT applies at 0 percent and no VAT is charged to the passenger.

For businesses, this means there is usually no VAT to reclaim on airline tickets, even when the travel is wholly for business purposes. This is not a restriction or a missed opportunity. It is simply how the VAT system is designed.

The key is to understand the difference between zero rated and exempt, to review invoices carefully for agent fees or additional charges, and to focus VAT recovery efforts on areas where VAT is actually charged.

Once you understand that, flights become one of the easiest travel costs to deal with from a VAT perspective, rather than one of the most confusing.