There is one question underneath all of this: are you VAT registered? Everything else follows from the answer, and most of the confusion comes from advice written for somebody in the other situation.
If you are not VAT registered
Do not add VAT. Do not show a VAT number. Do not write “plus VAT” or “ex VAT” anywhere on the document. Charging VAT when you are not registered to collect it is an offence, and the softer version of the same mistake, implying it with a “+ VAT” that never becomes a real charge, tells a client you do not know your own status.
Your quote shows one set of figures: the price, and the total. That is the whole answer, and it is worth stating positively rather than apologetically. A client who is themselves not registered is effectively getting the job 20% cheaper than they would from a registered competitor.
You must register once your VAT taxable turnover goes over £90,000 in any rolling twelve months, or if you expect to cross it in the next thirty days alone. Registration is not only a threshold thing: plenty of agencies register voluntarily below it, because they can then reclaim VAT on their own costs and because most of their clients are registered and do not care.
If you are VAT registered
Show it separately. A quote that gives one number with “incl. VAT” in small type beside it is legible to nobody, and a business client cannot see the figure they will reclaim. Three lines, in this order:
- Net. The total before VAT, which is what the work actually costs.
- VAT.The tax, with the rate stated. “VAT at 20%”, not just “VAT”.
- Total. What leaves their bank.
Which rate applies
Nearly all professional services supplied in the UK are standard rated at 20%. That covers design, development, marketing, SEO, consultancy, copywriting and everything adjacent to them. The reduced rate (5%) and the zero rate exist, and they apply to specific things such as domestic energy, children’s clothing and most food, rather than to professional work.
The place this gets interesting is a quote that mixes them, which does happen: a fit-out job with both labour and certain materials, or a package that includes printed matter. When that happens, VAT is worked out per rate band across the lines that share it, not line by line and then added up. The two methods disagree by a penny or two on realistic figures, and the penny always appears in front of the client.
Inclusive or exclusive: the decision nobody explains
Both are correct. Which one is right depends entirely on who is reading the quote, and getting it wrong is the commonest way a quote gets an awkward reply.
| Your client | Quote | Because |
|---|---|---|
| A VAT-registered business | Exclusive of VAT | They reclaim the VAT, so the net figure is the real cost to them |
| A business below the threshold | Inclusive, or show both | They cannot reclaim it, so the gross figure is what it costs |
| A consumer | Inclusive | Price indications to consumers must show the total payable |
| A charity or public body | Exclusive, and ask | Some supplies are relieved; do not assume either way |
Whichever you pick, say so on the document. One line, near the total: “Prices exclude VAT unless stated otherwise” or “All prices include VAT at 20%”. This is the single most common omission on quotes written in a word processor, and it is the one that produces the reply asking whether the number is the number.
What actually has to appear
A quote is not a VAT invoice, so the statutory list of invoice particulars does not apply to it. What it needs is whatever lets your client check the figures and say yes:
- Your business name, and your VAT number if you are registered
- Each line of work, with its own price
- The net total
- The VAT, with the rate named
- The gross total
- Whether the prices shown are inclusive or exclusive
- A date the quote is valid until
If a deposit is involved, show what it is in pounds as well as a percentage, and show the balance. “50% deposit” on a five-figure quote is a number the client has to work out themselves, and a client doing arithmetic is a client not signing.
Rate changes, and why the quote wins
The rate that applies is the one in force at the tax point, but the rate that should appear on a document is the one that applied when you issued it. A quote from March showing 20% still shows 20% in June, whatever has happened in between, because it is a record of what you offered rather than a live calculation.
This matters more than it sounds. The last UK standard-rate change was in January 2011, and the temporary hospitality rate ran from 2020 to 2022, so a business that quotes long jobs will eventually have a document in the wild that predates a change. QuotePack freezes the rate onto the document at the moment it is issued for exactly this reason, and historic quotes are never recalculated.
Common questions
Do you charge VAT on a quote?
Only if you are VAT registered. If you are, the quote should show VAT as a separate line and state the rate. If you are not registered you must not add VAT, must not show a VAT number, and should not use the words "plus VAT" anywhere on the document.
Should a quote be inclusive or exclusive of VAT?
Quote exclusive of VAT to a VAT-registered business, because they reclaim it and the net figure is what the job costs them. Quote inclusive to a consumer or a non-registered business, because the gross figure is what they actually pay. Either way the document must say which it is.
What VAT rate applies to my services?
Most services supplied by UK agencies, consultants, designers and developers are standard rated at 20%. Reduced (5%) and zero rates exist but apply to specific goods and services rather than professional services. If a single quote mixes rates, VAT is calculated per rate band and the bands are shown separately.
Do I have to show a VAT number on a quote?
A quote is not a VAT invoice, so there is no statutory requirement. In practice, showing it is worth doing: a business client checking whether they can reclaim the VAT will look for it, and its absence on a quote that charges VAT reads as an error.
What happens to a quote if I register for VAT before the work starts?
The rate that applied when you issued the quote is what you quoted. If you become registered between issuing and invoicing, the supply is standard rated and you will need to reissue the quote or absorb the VAT. Say which in writing before the work starts, because a client who agreed a gross figure will read an added 20% as a price rise.
A note on what this is and is not
This is a practical guide to putting VAT on a quote, written for people running small UK service businesses. It is not tax advice, and nothing here replaces HMRC’s own guidance or a conversation with your accountant, particularly on registration, on supplies to clients outside the UK, and on anything involving mixed or non-standard rates.