No, there is no VAT on train tickets in the UK. Rail fares are zero-rated, which means VAT is charged at 0%. Passenger transport in any vehicle designed or adapted to carry 10 or more passengers is zero-rated under Schedule 8, Group 8 of the VAT Act 1994. That covers trains, the Underground, trams and buses. The same applies to first class, season tickets and advance fares. For a business, there is no VAT to reclaim on a rail fare. Separately charged extras on the journey, such as food, station car parking and left luggage, are normally standard-rated at 20%.
Why train fares are zero-rated
Item 4 of Group 8 zero-rates the "transport of passengers" in a vehicle designed or adapted to carry not less than 10 passengers, among other things. HMRC's guidance in VAT Notice 744A puts it as transport in a vehicle with at least 10 seats. Its internal manual confirms that the driver and crew count as passengers when deciding the capacity. Every train qualifies easily.
Zero-rating is not the same as exemption. Rail operators are making taxable supplies at 0%, so they can reclaim the VAT on their own costs. That is why the fare carries no VAT at all, not a hidden amount. HMRC's VAT rates list shows passenger transport in vehicles carrying 10 or more passengers as zero-rated.
What else on a rail journey has VAT
Notice 744A separates incidental services, which are part of the fare and take its VAT rate, from ancillary services, which are separate supplies.
| Item | Treatment | VAT |
|---|---|---|
| Standard, first class and season tickets | Passenger transport | 0% |
| Seat reservations, accompanied luggage, bikes and pets carried with you | Incidental: follows the fare | 0% |
| Sleeper berth on an ordinary scheduled service | Incidental: follows the fare | 0% |
| Passenger supplements (Notice 744A gives Pullman supplements as an example) | Incidental: follows the fare | 0% |
| Food and drink from the trolley, buffet or restaurant car | Ancillary: separate supply | Normally 20% |
| Station car parking, cycle storage, left luggage, platform tickets | Ancillary: separate supply | Normally 20% |
| Unaccompanied luggage sent separately | Ancillary: separate supply | Normally 20% |
Notice 744A says ancillary services "are not part of the single supply of passenger transport services but are supplied separately. These are normally standard-rated."
International journeys, heritage railways and tourist trains
- Cross-border rail. Passenger transport that takes place both inside and outside the UK is zero-rated to the extent that it takes place within the UK, whatever the size of the vehicle. The part of the journey outside the UK is not subject to UK VAT. So a ticket from London to Paris carries no UK VAT;
- Steam and heritage railways. Excursions by train, including steam railways, are zero-rated domestic passenger transport. HMRC's manual says a preserved railway running a timetabled service between stations where passengers can board and alight is passenger transport, provided it is not within a place of entertainment or interest;
- Miniature railways and attractions. Notice 744A says novelty rides on miniature and model railways are not passenger transport at all. Transport to, from or within a theme park, zoo, museum or similar attraction is standard-rated where the price includes admission, or where the transport and admission are supplied by the same or connected persons. That is why a ride inside a theme park is treated differently from a heritage line between two towns.
Taxis, coaches and the 10-seat line
The 10-passenger test explains most of transport VAT. Coaches, buses, trams and ferries all qualify for the zero rate. Most taxis and private hire cars do not, because they carry fewer than 10 passengers, so a VAT-registered taxi operator charges 20%. The same journey can therefore carry VAT by taxi and none by train. That is a frequent source of confusion on expense claims.
Air travel is zero-rated under the same item through a separate limb. Item 4(c) covers transport of passengers "on any scheduled flight", whatever the size of the aircraft. Item 4(d) covers transport from a place within the UK to a place outside it, or the reverse, to the extent it is supplied in the UK. So domestic and international scheduled flights, like rail, show no VAT on the fare. As with trains, ancillary extras sold separately, such as meals or airport parking, need checking on the receipt. Air passenger duty, which does appear on flight receipts, is a separate duty and not VAT. It cannot be reclaimed as input tax.
One practical consequence for anyone checking expense claims: a single business trip often mixes zero-rated and standard-rated items. A typical example is a train fare, a taxi from the station, a hotel and a meal. Only the VAT shown on valid invoices for the standard-rated items is recoverable. The rail and air elements carry none.
What this means for business expenses
For a VAT-registered business, the practical points are:
- Nothing to reclaim on the fare. A rail ticket has no input VAT. Entering a VAT element against a train fare in your bookkeeping is a common error. It overstates input tax and is the kind of thing a VAT inspection picks up;
- Check receipts that show VAT. If a travel receipt does show VAT, it relates to something other than the fare, such as an ancillary item. It can only be reclaimed with a valid VAT invoice and where the cost is for business use;
- Subsistence on the train. VAT on food and drink bought for an employee on a business journey follows the normal input tax rules. Entertaining customers is blocked;
- Selling travel. Businesses that put together packages including rail travel, such as event organisers or tour operators, need to look at the single-supply and Tour Operators' Margin Scheme rules before assuming the zero rate passes through.
Our VAT inspection guide explains what HMRC looks at in expense claims. For more on how zero-rating differs from exemption, see our guide to the VAT rate in the UK.
Travel and subsistence is one of the most common areas for small input tax errors, and they add up across a year of claims. Our VAT health check reviews how your bookkeeping treats travel, subsistence and other expense categories, and our VAT compliance team can correct errors before HMRC finds them.