How to add VAT to prices
There’s a very simple formula for each VAT rate. You multiply your price by 1.05 for a 5% VAT rate, by 1.20 for a 20% VAT rate, or leave the price as is for a 0% VAT rate.
You don’t add any VAT to out-of-scope or VAT-exempt products or services that you might sell.
What are VAT invoices?
A VAT invoice tells a customer how much VAT they paid on a purchase. It’s important information because some of your customers may be able to claim that tax back. If you’re VAT registered, you must issue VAT invoices.
VAT invoice example
Here are the details you need to provide on a VAT invoice.
VAT tax point
If you’re issuing an invoice more than two weeks after goods or services were delivered, add an extra line to your invoice saying ‘VAT tax point’ with the date of delivery next to it. This can help your business customers claim the VAT back sooner.
Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
Guide to VAT
Making a start with VAT? Don’t worry. It’s a little extra admin, but follow our guide and you’ll soon be on top of it.
- What is VAT and how much is it?
You’ve probably heard about VAT before – it stands for value-added tax and is added onto prices in the UK.
- Registering for VAT
Find out if your business needs to worry about VAT. And if so, learn how to register for VAT.
- Calculating VAT and issuing VAT invoices
If you’re a VAT-registered business you must add VAT to your prices. You also need to issue VAT invoices. Find out how.
- Claiming back VAT
VAT-registered businesses can claim back the VAT they pay on business expenses. Let’s learn how.
- Working out your VAT refund or payment
Working out VAT is simple maths. Keeping track of all your transactions is the tricky part. Let’s learn the process.
- VAT returns and due dates
Once you’ve registered for VAT, you’ll need to submit returns online regularly – and square up with HMRC. Here’s how.
- Tools and guides for your business
Now you know the ins and outs of VAT, but it can be tough to keep on top of it all. Xero’s got the resources to help.
Download the guide to VAT
Get your small business tax sorted. Fill in your details to get our full VAT guide as a PDF.