VAT & Tax

Add VAT to invoices if you are VAT registered. Keep it simple if you are not.

For VAT-Registered Freelancers

If you are registered for VAT with HMRC, you must charge VAT on eligible services and products. Qazua makes this automatic.

Step 1: Add Your VAT Number

1. Go to Account (from the header menu)
2. In the Business Information section, click Edit
3. Enter your VAT number (e.g., GB123456789)
4. Save your changes

Your VAT number will now appear on all invoices and PDFs.

Step 2: Add VAT to Invoice Line Items

When creating or editing an invoice, each line item has a "Tax %" field where you can specify the VAT rate:

1. Create a new invoice or edit an existing one
2. For each line item, enter the applicable tax rate (e.g., 20 for UK standard rate)
3. VAT is calculated automatically based on the tax rate you enter

Example: How VAT Appears on Invoices

When you add tax rates to your line items, the invoice totals section displays:

UK VAT Rates

The UK has three VAT rates:

Standard Rate: 20%

Applies to most goods and services. This is the default rate for most freelancers.

Reduced Rate: 5%

Applies to specific goods like children's car seats, home energy, and certain renovations. Rare for most freelancers.

Zero Rate: 0%

Applies to things like books, children's clothes, and most food. You still need to show VAT at 0% on invoices if you sell zero-rated items.

Special Cases

Reverse Charge (B2B EU Clients)

If you provide services to a business client in the EU, you may need to use the reverse charge mechanism:

• You do not charge VAT on the invoice
• The client pays VAT in their own country
• You must note "Reverse charge applies" on the invoice

To enable reverse charge on a specific invoice:

1. Create or edit the invoice
2. Enable "Reverse charge" option
3. VAT will not be added, and a note will appear on the invoice

Zero-Rated Exports

Services provided to clients outside the UK are often zero-rated for VAT. This means:

• You do not charge VAT
• You can reclaim VAT on related expenses
• You still report these on your VAT return

To apply 0% VAT to an item, simply enter "0" in the "Tax %" field for that line item when creating or editing the invoice.

VAT Invoicing Requirements

HMRC requires VAT invoices to include:

• Your VAT number
• Invoice number (sequential)
• Invoice date
• Your business name and address
• Client name and address
• Clear description of goods/services
• Net amount (before VAT)
• VAT rate and VAT amount
• Total amount (including VAT)

Qazua invoices include all of these automatically when you enable VAT.

Common Questions

What if I am not VAT registered yet?

Simply leave the "Tax %" field empty or set to 0 on all invoice line items. Do not add your VAT number to your business information. You must register for VAT once your taxable turnover exceeds £90,000 in a 12-month period (as of 2024/2025 tax year). Check HMRC's website for current thresholds.

Can I use different VAT rates on the same invoice?

Yes. Each line item on an invoice has its own "Tax %" field, allowing you to apply different VAT rates to different items (e.g., 20% standard rate for some items, 5% reduced rate for others, or 0% for zero-rated items).

What about Making Tax Digital (MTD)?

Qazua helps you create compliant VAT invoices. For VAT return filing, you will need MTD-compatible software or your accountant's system. Qazua provides clear invoice records you can use for your VAT returns.

Do I charge VAT to international clients?

It depends:

• EU business clients: Usually reverse charge (no VAT charged)
• EU consumers: May need to charge VAT in their country if you exceed thresholds
• Non-EU clients: Usually no VAT (zero-rated export)

VAT rules for international clients are complex. Consult an accountant if you regularly work with overseas clients.