Do Tradespeople Need to Charge VAT? (UK Guide)

One of the most common questions from UK tradespeople is whether they need to charge VAT on their invoices. The short answer: it depends on how much you earn. Here's what you need to know.

The VAT Registration Threshold

You must register for VAT with HMRC if your taxable turnover exceeds £90,000 in any rolling 12-month period. This is based on turnover (total sales), not profit.

You must also register if you expect your turnover to go over £90,000 in the next 30 days alone.

If your turnover is below £90,000, VAT registration is optional. You can choose to register voluntarily, but you're not required to.

Note: Always check the latest threshold on the GOV.UK website as it can change in Budget announcements.

What Counts as Taxable Turnover?

Your taxable turnover includes the total value of everything you sell that isn't VAT exempt. For most tradespeople — plumbers, electricians, builders, carpenters, roofers — virtually all of your work will count towards the threshold.

It's your total invoiced sales over any 12-month period, not just the tax year. HMRC looks at a rolling 12-month window, so you need to keep track throughout the year.

What Happens When You Register for VAT?

Once you're VAT registered, you must:

• Charge VAT on your invoices — usually 20% on top of your normal price
• Submit VAT returns — typically every quarter
• Pay the VAT you've collected to HMRC (minus any VAT you've paid on business purchases)
• Keep detailed records of all VAT charged and paid

Your invoices will need to include your VAT registration number, the VAT rate, and a breakdown of the VAT amounts. See our invoice checklist for the full list of what's required.

Should You Register Voluntarily?

Some tradespeople earning under £90,000 choose to register for VAT voluntarily. There are pros and cons:

Advantages:

• You can reclaim VAT on business purchases — tools, materials, van costs, fuel
• It can make your business look bigger and more established to commercial clients
• Some larger contractors prefer to work with VAT-registered subcontractors

Disadvantages:

• Your prices effectively increase by 20% for non-VAT-registered customers (like homeowners)
• More admin — quarterly VAT returns and careful record-keeping
• You need to use Making Tax Digital (MTD) compatible software for VAT returns

For most sole trader tradespeople working mainly with domestic customers (homeowners), voluntary VAT registration doesn't usually make sense until you're approaching the threshold.

The Flat Rate Scheme

If you register for VAT and your turnover is under £150,000 (excluding VAT), you may be eligible for the Flat Rate Scheme. Instead of calculating VAT on every individual purchase and sale, you pay a fixed percentage of your gross turnover to HMRC.

The percentage depends on your trade. For example, general building and construction services typically fall around 9.5%. You still charge your customers 20% VAT as normal, but you pay HMRC a flat rate — so if your rate is lower than 20%, you keep the difference.

The Flat Rate Scheme simplifies your VAT admin significantly. Ask your accountant whether it would benefit your specific situation.

What If You Go Over the Threshold?

If you realise your turnover has exceeded £90,000 in the last 12 months, you must notify HMRC within 30 days. You'll then need to start charging VAT from the date HMRC tells you. Late registration can result in penalties.

Tip: keep a running total of your invoiced sales. If you're getting close to the threshold, start planning ahead — talk to an accountant about the best time to register and whether the Flat Rate Scheme is right for you.

How to Add VAT to Your Invoices

With InvoiceJob, you can add VAT to your invoices with a single toggle. The tool automatically calculates the VAT amount and shows the breakdown your clients need. It's free to use and built specifically for UK tradespeople.

For a broader overview of invoicing requirements, see our guide on how to invoice as a self-employed sole trader.