Do you need to charge VAT at all?
Check your rolling 12-month turnover, not your tax year. The moment it passes £90,000 you have 30 days to register, and you must start charging VAT from your registration date. Many tradespeople register voluntarily before the threshold — it lets you reclaim VAT on tools, vans and materials, which can be worthwhile if your costs are high.
Which rate applies to your work
Most trade work is standard-rated at 20%, but there are important exceptions:
- 20% (standard) — repairs, maintenance and most improvement work.
- 5% (reduced) — certain energy-saving installations, some residential conversions and some work on homes empty for 2+ years.
- 0% (zero) — new-build housing and certain work for disabled customers.
- Get the rate wrong and you're liable for the shortfall, so check HMRC's guidance for anything unusual.
What a VAT invoice must show
A VAT invoice has legal requirements beyond a normal invoice:
- Your VAT registration number.
- A unique sequential invoice number and the tax point (usually the invoice date).
- Net amount per line, the VAT rate applied, and the VAT amount.
- A clear total: net, VAT and gross.
Quotes, deposits and part payments
Show VAT clearly on quotes too — a customer who accepts a quote thinking it's the final price will not happily pay 20% more on the invoice. State either "+ VAT" or the VAT-inclusive total. If you take deposits, VAT is due on the deposit when you receive it, not when the job finishes.
Under Making Tax Digital, VAT-registered businesses must keep digital records and file through compatible software — another reason to keep invoicing digital from day one.
Put it into practice
Do this in minutes with the Quotes & Invoices tool
Tick VAT in your settings once and every quote and invoice adds 20% automatically — net, VAT and gross always shown correctly, with your VAT number on the document.
Sources & further reading
Common questions
- Can I charge VAT before my registration number arrives?
- You charge VAT from your registration date even before the number arrives — show the VAT amount on invoices and reissue them with your VAT number once you receive it.
- Do I add VAT to materials as well as labour?
- Yes. Once registered, VAT applies to the whole supply — labour, materials and any markup — unless the entire job qualifies for a reduced or zero rate.
- What happens if I go over £90,000 by accident?
- Register within 30 days of the end of the month you crossed the threshold. HMRC can backdate registration and charge the VAT you should have collected, so monitor your rolling total monthly.
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