The UK VAT Guide for Freelancers

Value Added Tax (VAT) in the UK works differently than Sales Tax. It is a tax on consumption, and as a freelancer, you might technically be an unpaid tax collector for HMRC.

The £85,000 Threshold

You only *need* to register for VAT if your taxable turnover exceeds £85,000. However, many freelancers register voluntarily to look more professional or to reclaim VAT on business purchases (like laptops and software).

Key Concepts

1. Standard Rate: Currently 20% on most goods and services. 2. Inclusive vs. Exclusive: B2B quotes are often "plus VAT", while B2C prices must include VAT. 3. Making Tax Digital (MTD): You need digital records. Paper receipts in a shoebox don't cut it anymore.

How SparkyMinis Handles VAT

1. VAT Registration Number

Your invoices *must* show your VAT number if you are registered.

Go to: `Dashboard > Settings > Tax & Compliance`.

Add Tax ID: Enter your "GB 123 456 789" number. This will automatically appear on every PDF invoice you generate.

2. The 20% Chip

Create a "VAT 20%" Tax Chip in Settings.

When billing a client £500, apply the chip. The invoice total becomes £600.

The PDF clearly separates Subtotal (£500)** and **VAT (£100).

3. Reclaiming VAT (Input Tax)

Don't leave money on the table. When you buy a business expense (e.g., a train ticket to London):

Log the expense in SparkyMinis.

Mark it as "ITC Eligible" (Input Tax Credit).

At the end of the quarter, `Dashboard > Business > Reports` will show you exactly how much VAT you collected vs. how much you paid, giving you your net liability.

Setup Your UK VAT Profile →

"UK Freelancers: Making Tax Digital (MTD) Simple"

The UK VAT Guide for Freelancers

The £85,000 Threshold

Key Concepts

How SparkyMinis Handles VAT

1. VAT Registration Number

2. The 20% Chip

3. Reclaiming VAT (Input Tax)

Recent Insights

"Client vs. Friend: Managing Your Network"

"Privacy is Architecture, Not Policy"

"The Anti-Burnout Schedule: Deep Work & Deep Rest"

"Stop Balancing, Start Integrating"

"Why We Don't Trust the Cloud (Fully)"

Join our Newsletter