Do I need to charge UK VAT on SaaS?
It depends on who your customers are.
| Customer | Who accounts for UK VAT | Do you need to register? |
|---|---|---|
| UK consumer (B2C) | You, at 20% | Yes, from the first sale |
| UK VAT-registered business (B2B) | The customer, under the reverse charge | Usually no, if all UK customers are businesses |
| UK business not registered for VAT | Treated as B2B if you hold evidence it is a business | Usually no |
| Customer outside the UK | Not UK VAT | No UK obligation |
What counts as a digital service?
HMRC treats a service as digital when it is supplied over the internet and is automated, with little or no human involvement. SaaS subscriptions, apps, downloads, streaming, online games and pre-recorded courses usually qualify. Consulting or live tuition delivered over video usually doesn’t, and follows the general rules for services.
How does the reverse charge on services from overseas work in the UK?
When a UK VAT-registered business buys most services from an overseas supplier, the customer accounts for the VAT on its own VAT return, as if it had supplied the service to itself. The supplier doesn’t charge UK VAT and often doesn’t need to register.
For example: a Canadian SaaS company sells a £1,000 subscription to a VAT-registered UK agency. It invoices £1,000 with no VAT and a reverse-charge note. The agency declares £200 output VAT and, if fully taxable, reclaims £200 on the same return.
How do I prove where my customer is and whether it’s a business?
For consumers, keep evidence of where the customer usually lives, such as billing address, IP address and bank or card country. For business customers, keep their VAT number. If a business customer isn’t VAT-registered, you can accept other evidence of business status, such as its company website or commercial documents.
What if I sell through an app store?
If an app store or platform sets the terms, takes payment and delivers the service, it may be treated as the supplier to the consumer. Many app stores state in their terms that they account for UK VAT on your sales; check yours. Sales through your own website remain your responsibility.
Common scenarios
“I’m a US SaaS company with UK customers. Do I need to register for UK VAT?”
If any UK customer is a consumer, yes, from the first sale, with no threshold. If every UK customer is a VAT-registered business, the reverse charge applies and you usually don’t need to register. Many SaaS companies have a mix, so check your customer list before deciding.
“I only sell to UK businesses. Do I still need a UK VAT number?”
Usually not, as long as every customer accounts for the VAT under the reverse charge and you keep evidence of their business status. If you start selling to consumers, you must register within 30 days of the first consumer sale.
“We sell online courses: some pre-recorded, some live.”
Pre-recorded, automated courses sold to UK consumers are digital services and need UK VAT registration. Live courses with a tutor may follow different rules. Split them in your pricing and records.
Selling software to UK consumers? We’ll register you.
We check your customer mix, register you as an overseas business and set up quarterly Making Tax Digital returns.
Frequently asked questions
Is there a VAT threshold for digital services sold to UK consumers?
Not for businesses established outside the UK. They must register for UK VAT from their first taxable supply, including digital services.
What rate of VAT applies to SaaS in the UK?
Most digital services are standard-rated at 20%. Some electronic publications, such as e-books and digital newspapers, are zero-rated.
Do I need to register if a UK business customer has no VAT number?
Not necessarily. If you hold other evidence that the customer is in business, you can treat the sale as business-to-business.
Can I use a UK tax representative for SaaS VAT?
You can, but it is rarely required. HMRC only directs some overseas businesses to appoint one. See tax representative or agent.
Related guides
Sources
- GOV.UK: VAT rules for supplies of digital services to consumers
- HMRC VAT Notice 741A: Place of supply of services
- HMRC VAT Notice 700/1, sections 2.3 and 9.3
General information based on HMRC guidance as at 27 September 2026, not advice for your situation. Rules change and depend on your facts. Talk to us before acting.