VAT for Freelancers in the UK: Complete Guide

You MUST register for VAT when: • Your VAT-taxable turnover exceeded £90,000 in the last 12 months, OR • You expect to exceed £90,000 in the next 30 days alone

You CAN voluntarily register below this threshold.

The 12-month test is rolling — not based on the tax year. Check regularly!

Small businesses (under £150K) can use the Flat Rate Scheme: • Charge standard 20% VAT to clients • Pay HMRC a lower flat rate percentage (varies by sector) • Keep the difference

Example for IT consultants (14.5% flat rate): • Invoice: £1,200 (£1,000 + £200 VAT) • Pay HMRC: £1,200 × 14.5% = £174 • Keep: £200 - £174 = £26 extra

Limited cost traders pay 16.5% (less advantageous).

Since April 2022, all VAT-registered businesses must: • Keep digital records • Submit VAT returns using MTD-compatible software • Use digital links between software (no manual re-entry)

HMRC-recognized software includes Xero, QuickBooks, FreeAgent, and others.

Post-Brexit changes affecting freelancers: • EU reverse charge no longer applies • Exports to EU are zero-rated (with proof) • Imports from EU now require customs declarations • No EU OSS — separate registrations needed for EU B2C sales • Northern Ireland Protocol creates unique rules for goods