How much VAT should I charge? (UK 2026/27)
Last updated: 6 April 2026
In short
Most UK freelancers and small businesses charge VAT at the standard rate of 20% once registered. Some supplies are reduced-rated at 5% (for example domestic energy-saving work) or zero-rated at 0% (for example most food and children's clothing). You add the VAT on top of your net price and show it separately on the invoice.
Once you’re VAT-registered you have to add VAT to what you sell — but how much depends on what the sale actually is. Most freelancers charge one rate on everything, but it pays to know the three UK rates and which applies to you. This guide explains the rates for 2026/27, how to calculate the amount, and how to present it.
The three UK VAT rates
For 2026/27 there are three rates:
| Rate | Percentage | Typical examples |
|---|---|---|
| Standard | 20% | Most goods and services — design, consulting, software, retail |
| Reduced | 5% | Domestic gas and electricity, children’s car seats, some energy-saving installations |
| Zero | 0% | Most food, books, newspapers, children’s clothing, public transport |
Most freelancers and service businesses charge the standard rate of 20% on everything they invoice. Reduced and zero rates apply to specific categories of goods and services — if your work doesn’t clearly fall into one, assume 20%.
Zero-rated is not the same as exempt. A zero-rated sale still counts as a taxable supply: you charge 0% VAT but you can still reclaim VAT on your costs, and the sale counts towards the £90,000 registration threshold. Exempt sales (like insurance or some financial services) are outside VAT entirely, and you generally can’t reclaim VAT on costs linked to them.
How to calculate the VAT to add
VAT is added on top of your net (pre-VAT) price. At the standard rate:
- To add VAT: multiply the net price by 1.20. A £1,000 net fee becomes £1,200 — that’s £1,000 plus £200 VAT.
- To remove VAT from a VAT-inclusive figure: divide by 1.20. A £600 gross price contains £100 of VAT (£600 ÷ 1.20 = £500 net).
A common mistake is to work out 20% of a gross figure to find the VAT — that overstates it. To back out VAT from a gross amount, divide by 1.20, don’t take 20% of the total. Our VAT calculator handles both directions (add and remove) at 20%, 5% or 0% so you don’t have to do the arithmetic.
Showing VAT on your invoice
Once registered, a VAT invoice must show more than a normal invoice:
- Your VAT registration number
- The rate of VAT charged on each item (20%, 5% or 0%)
- The net amount, the VAT amount, and the gross total shown separately
- The tax point (usually the invoice date)
Showing the VAT as a distinct line matters: your VAT-registered clients need it to reclaim the VAT, and HMRC needs it to be clear on your records.
Pricing: who really pays the 20%?
- Selling to VAT-registered businesses (B2B): they reclaim the VAT you charge, so your 20% is effectively neutral to them. Adding VAT rarely costs you the sale.
- Selling to consumers or non-registered businesses (B2C): they can’t reclaim it, so your VAT-inclusive price is effectively 20% higher — or your margin absorbs it. Think carefully about how you present prices to this audience.
The Flat Rate Scheme
If your turnover is modest you can join the Flat Rate Scheme: you still charge customers 20%, but you pay HMRC a single fixed percentage of your gross (VAT-inclusive) turnover and don’t reclaim VAT on most purchases. The percentage depends on your trade. It simplifies record-keeping and can leave a small surplus for businesses with few costs — but “limited cost” businesses pay a higher 16.5% rate, which usually wipes out any benefit. It’s worth modelling both ways before opting in.
Quick checklist
- Charge 20% unless your goods or services are specifically reduced- or zero-rated.
- Add VAT on top of your net price; don’t take 20% off a gross figure to find the VAT.
- Show your VAT number and the VAT amount separately on every invoice.
- Remember zero-rated sales still count towards the £90,000 threshold and still let you reclaim input VAT.
This guide is information, not tax advice, and uses published HMRC rates for 2026/27. VAT liability can be genuinely tricky for specific products or services — check gov.uk/vat-rates or speak to an accountant if you’re unsure which rate applies.
Try the tool VAT Calculator Add or remove UK VAT at 20%, 5% or 0% and see the net, VAT and gross amounts instantly. Free VAT calculator for freelancers and small businesses — no signup.