Use case
VAT Calculator for UK Freelancers
A worked example for a VAT-registered freelancer — hourly rate plus VAT, with the invoice breakdown your client expects.
The setup
You're a VAT-registered freelance developer. Your target net hourly rate is £75. You quote in net because your client is also VAT registered. (If you haven't picked a rate yet, work it out in the Freelance Rate Calculator first.)
Service pricing with VAT
Net hourly rate: £75.00
VAT @ 20%: £15.00
Gross rate (client pays): £90.00 / hour
Hourly rate × hours worked
Project: 40 hours of build work over a month.
Net subtotal: 40 × £75 = £3,000.00
VAT @ 20%: £600.00
Gross total (client pays): £3,600.00
Of the £3,600 the client transfers, £600 belongs to HMRC — set it aside for your next VAT return.
Invoice breakdown the client expects
INVOICE INV-2026-0042
From: Your Name Ltd — VAT GB 123 4567 89
To: Client Ltd
—
Development work — 40 hrs × £75.00 = £3,000.00
—
Net total: £3,000.00
VAT @ 20%: £600.00
Gross: £3,600.00
Generate this in seconds with the Invoice Generator or start from the UK VAT Invoice Template.
Day rate variation
Same maths, day rate instead of hourly:
Net day rate: £550.00
VAT @ 20%: £110.00
Gross: £660.00 / day
Tips for freelancers
- Always clarify whether your quote is net or gross before signing a contract.
- Treat the VAT element as HMRC's money — keep it in a separate pot.
- Reclaim input VAT on tools, software and subscriptions.
- If you also bill consumers, quote those prices VAT-inclusive — see VAT Inclusive vs Exclusive.
Run your own numbers
Use the VAT Calculator to add or remove VAT from any rate, then drop the figures into the Invoice Generator. Background reading: How VAT Works for Freelancers.
Frequently asked questions
Do I quote my hourly rate inclusive or exclusive of VAT?
For B2B clients, quote net (exclusive). They'll reclaim the VAT, so net is the apples-to-apples comparison. For B2C clients, quote gross (inclusive) so they see the real price.How do I add VAT to an hourly rate?
Multiply by 1.20. A £75 net hourly rate becomes £90 gross per hour once 20% VAT is added.Do I lose money by being VAT registered?
Not if your clients are VAT registered — they reclaim what you charge. You also recover VAT on your own business expenses, which can be a net positive.What should my invoice show?
Your VAT number, the hours or days worked, the net subtotal, the VAT amount, and the gross total. Use the VAT Invoice Template to get the layout right.