Free tool
UK TOMS VAT Calculator
Estimate the VAT on a package under the UK Tour Operators’ Margin Scheme. Enter the selling price and what you paid for the travel, split between the UK and abroad, and see the margin, how it is apportioned and the VAT due on it.
Estimated VAT on this package
£66.67
That’s 0.56% of the selling price, leaving £1,933.33 of margin.
Margin (incl. VAT)
£2,000.00
Margin %
16.7%
| Selling price | £12,000.00 |
|---|---|
| Less direct costs | -£10,000.00 |
| Total margin | £2,000.00 |
| UK margin standard-rated, shared by cost | £400.00 |
| Non-UK margin zero-rated | £1,600.00 |
| VAT on UK margin × VAT fraction 1/6 | £66.67 |
| Total VAT | £66.67 |
| Margin after VAT | £1,933.33 |
Per-package estimate using HMRC’s cost-based method. Your actual liability comes from the provisional and annual calculations across all your packages.
How the calculation works
- Margin. The selling price (including VAT) less the direct costs of the package: bought-in travel at what you paid, including VAT, plus the cost of any in-house supplies.
- Apportionment. The margin is shared across the elements in proportion to their costs. This is HMRC’s cost-based method, which gives the same percentage margin on every element.
- VAT on the margin. The share for travel enjoyed in the UK is standard-rated: VAT is that share × 20/120 (one-sixth). The share for travel enjoyed outside the UK is zero-rated.
- In-house supplies are taxed under the normal VAT rules on their cost plus their share of the margin, at the rate that applies to that supply.
- Losses. A package with a negative margin shows no VAT. The tool shows how much output VAT its UK share would take off the year’s total instead.
What the tool doesn’t do
- It works per package. Your actual liability comes from HMRC’s provisional calculation on each return and a year-end calculation across all your packages, done immediately after your financial year-end.
- It uses the cost-based method only. HMRC says you should, in principle, use the market value method where you can establish a market value for in-house supplies.
- It doesn’t split individual journeys or cruises between the UK and abroad for you. Enter the costs already split (for example by mileage or nights).
- It doesn’t cover business-to-business wholesale supplies you have opted to treat outside TOMS, or the EU member states’ own schemes.
Questions & answers
How is VAT calculated under TOMS?
You pay VAT on your margin, not on the full selling price. The margin is the selling price less the direct costs of the travel you bought in. The margin is VAT-inclusive, so the VAT is the UK standard-rated part of it multiplied by the VAT fraction: 20/120, or one-sixth, at the current 20% rate.
Is the margin on travel outside the UK zero-rated?
Yes. HMRC VAT Notice 709/5 says the margin liability is standard-rated when the travel is enjoyed in the UK and zero-rated when it is enjoyed outside the UK. A package with both is split in proportion to the costs. Journeys that stop in the UK, and cruises, need their own split (for example by mileage or nights in and out of the UK).
Can I reclaim the VAT on hotels and services I buy in?
Not on travel you resell under TOMS: HMRC says you cannot reclaim VAT on purchases you make to resell as margin scheme supplies. That is why costs go into this calculator including VAT. VAT on your overheads and on in-house supplies can be reclaimed under the normal rules.
What happens if a package makes a loss?
The calculator shows no VAT on that package and tells you roughly how much output VAT the loss would remove from the year’s total. Under TOMS the margin is calculated for the whole financial year across all packages, so a loss on one package reduces your overall margin. If the year’s total is negative, HMRC’s calculation shows it as a deductible amount on your VAT return.
Is this per-package figure what I put on my VAT return?
Not directly. HMRC requires you to account for VAT provisionally during the year, using the previous year’s percentages, and to do a year-end calculation immediately after your financial year ends, adjusting on the next VAT return. Use this tool to price and sense-check individual packages, and your accountant for the returns.
Does this work for EU TOMS?
No. EU member states run their own versions of the scheme with different rates and rules, and UK businesses selling travel in the EU may have obligations there. This calculator covers the UK scheme only.
Sources & data
Every figure this tool uses by default is listed here with where it came from and when we last checked it. Spotted something out of date? Tell us.
- UK standard rate of VATGOV.UK: “The standard VAT rate is 20%.” In force since 4 January 2011 (VAT Notice 700, section 3.3.1).
- VAT fraction (VAT element of a VAT-inclusive amount)VAT Notice 700, 7.3.1: “rate of tax divided by (100 + rate of tax)… with VAT at 20% the VAT fraction is 20/120… the same as one-sixth.” TOMS margins are VAT-inclusive, so VAT on the margin = margin × VAT fraction (Notice 709/5, sections 9 and 11).
- VAT liability of the TOMS margin by where the travel is enjoyedNotice 709/5, 4.8: “standard-rated when the tour is enjoyed in the UK; zero-rated when enjoyed outside the UK.” The notice cites VATA 1994 s.53, Schedule 8 Group 8 item 12 and the Tour Operators Order 1987. Mixed packages are apportioned by direct cost (section 9, steps 12–13). Journeys with stops in the UK must be split, for example by mileage or nights (sections 4.9–4.12).
- TOMS cost-based apportionment of the marginNotice 709/5, 5.2: “The apportionment of the total margin calculated is based on the direct costs of your supplies”, so “you achieve the same percentage margin on in-house and Margin Scheme elements”. Section 5.3: you should, in principle, use the market value method where a market value for the in-house supply can be established (not modelled by this tool).
- Input VAT on bought-in travel resold under TOMSNotice 709/5, 4.4: “You cannot reclaim VAT on purchases that you make to resell as Margin Scheme supplies.” VAT on overheads and on in-house supplies is reclaimable under the normal rules (sections 2.6 and 4.3). Costs therefore enter the margin calculation VAT-inclusive.
- TOMS annual calculation and negative totalsNotice 709/5, 5.7 (force of law): the calculation “must be done immediately after your financial year-end”, with any adjustment on “the first VAT period ending after your financial year-end”. During the year you account provisionally using the previous year’s percentages (section 10). Section 9, step 32: the result goes in box 1 “as a payable amount where the amount is positive or as a deductible amount where the amount is negative.” Margins are calculated in aggregate for the year, so a loss on one package reduces the total margin; the notice has no separate per-package negative-margin rule.
Cite or link to this tool
Writing about this topic? You are welcome to link to or cite this tool.
For brands & suppliers
Reach the people planning luxury travel
Our tools are used by advisors, hotels, DMCs and travellers at the moment they are planning and pricing. Sponsorships, featured listings and custom tools are available.
Work with us