VAT guides

VAT is one of the two tax rules that catch most trades early. The notes below are the two or three things you need to hold in your head before you open a calculator or send a bill. They were read on gov.uk on 24 October 2026 and the links are at the foot so you can check them.

Two things to know before anything else

First, there are three UK VAT rates. The standard rate is 20 percent on most goods and services. The reduced rate is 5 percent on some goods and services such as home energy. The zero rate is 0 percent on zero rated goods such as most food and children’s clothes. Read the list on gov.uk for the goods in each rate.

Second, you must register for VAT when your taxable turnover goes over the threshold in the last 12 months. The threshold sits on gov.uk and was £90,000 when this page was checked on 24 October 2026. You can also register below the threshold if it suits the work. Once registered you must charge VAT where it applies and you must issue a VAT invoice within 30 days of supply on that job.

Third, VAT is not yours. You collect it on sales and you offset VAT on purchases, then you pay the balance to HMRC. The app shows VAT on the quote and on the bill so you can see it, but it never treats VAT as profit.

How to add and remove VAT

To add VAT, multiply the net price by one plus the rate. At 20 percent you multiply by 1.20. A net price of £100 becomes £120. The VAT is £20.

To remove VAT, divide the VAT inclusive price by one plus the rate. At 20 percent you divide by 1.20. A VAT inclusive price of £120 holds £20 of VAT and £100 net. Do not take 20 percent off the inclusive price. That leaves £24 and the VAT is only £20. You must divide by 1.20.

At 5 percent you multiply by 1.05 to add and divide by 1.05 to remove. At 0 percent the price does not change.

What a VAT invoice must show

Gov.uk on VAT invoices lists the fields. A VAT invoice must have a unique invoice number, your name and address, your VAT number, the customer name and address, the date of supply, the invoice date, a description of the goods or services, quantity and unit price, VAT rate and VAT amount for each item, total without VAT, total VAT and the total price. A simplified invoice can be used under £250 including VAT. Read the full list on the source linked below.

If you are not VAT registered, your invoice must not show VAT and you must not use a VAT number you do not have. The app shows a VAT row only when you have a VAT number in Settings and the VAT on that invoice is above zero.

Calculators for VAT

Each page explains the sum in words with a table of common amounts, so the page is still useful with the calculator removed. Every rate is read from gov.uk on the date shown on that page.

• VAT calculator: add or remove VAT at 20 percent, 5 percent and 0 percent with the reverse sum shown and a table of common amounts.
• Remove VAT calculator: take VAT off a VAT inclusive price, with the common mistake named.

Templates for VAT

• Invoice template: a full worked invoice with a VAT breakdown, and the CIS deduction where it applies, plus the payment reference and the bank block.
• Quote template: a full worked quote with the VAT row and the terms the customer sees before accepting.

Both templates were built from the app’s own document builder so what you see is what the customer gets.

Posts on VAT

Posts carry their own key facts box at the top and a sources list at the foot. Each one links to gov.uk on the point it makes.

• VAT threshold guide: when you have to register and when you can stay below, and what to do when you cross the line.
• How to raise a VAT invoice: what a VAT invoice has to show, and when a simplified invoice can be used.
• Making Tax Digital for solo traders: HMRC quarters and what to keep for VAT and income tax.
• What to charge for a job: building the price net of VAT before you apply the rate.

Related pages in the app

• Tax: the estimate from your records in bands, with CIS already taken off, and the note that it is an estimate not advice.
• Making Tax Digital: HMRC quarters, the thresholds, and whether the rules apply to you yet.
• Reports: the year, what you are owed, and the tax and VAT in one place.
• Invoices: a bill built from the job, with the invoice number as the payment reference.

Sources

VAT rates and threshold read on gov.uk on 24 October 2026.

Latest from the blog

The newest posts on VAT sit here with the newest first. Until they are live the list below is planned and will appear as each post is published.

• VAT threshold guide: when you have to register for VAT and when you can stay below.
• How to raise a VAT invoice: what a VAT invoice has to show under the VAT invoice rules.
• Making Tax Digital for solo traders: the four updates a year and what to do if you have done nothing.

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