How to show VAT on a quote: net, VAT and gross totals

The first thing a client looks at is the number at the bottom. If it is not clear whether that number includes VAT, you either get an unnecessary phone call or the quote gets misread. Showing VAT clearly builds trust and avoids surprises when the invoice arrives. The examples below use the UK standard rate of 20%, but the logic works for any VAT system.

Three lines: net, VAT, gross

The totals block of every quote should have three lines: net total (excluding VAT), VAT amount and gross total (including VAT). Business clients can usually reclaim VAT, so they compare net figures. A homeowner cares about the gross amount they will actually pay. Show both clearly and one quote works for either type of client.

VAT per line or on the total?

For business clients, the cleanest approach is net unit prices on each line and VAT calculated on the total. A "VAT %" column on each line helps when rates differ. For private clients, gross prices per line can be easier to read, but still state the VAT amount in the totals.

Discount first, then VAT

Harper Heating quotes an office fit-out: 2 air conditioning units at £2,450 = £4,900, installation £1,200, pipework and materials £400. Subtotal £6,500. A 5% discount of £325 brings the net total to £6,175. VAT at 20% is £1,235, so the gross total is £7,410.

A common mistake is to add VAT to the £6,500 first and take the £325 off afterwards. That gives £7,475. The £65 difference is the VAT on the discount, and your client's bookkeeper will spot it immediately.

More than one VAT rate in a quote

Besides 20%, the UK has a reduced rate of 5% and a zero rate. For example, installing energy-saving materials such as heat pumps in homes is currently zero-rated (until 31 March 2027). If a homeowner's quote has a £9,000 heat pump installation at 0% and £800 of other electrical work at 20%, show VAT per rate: £0 on £9,000 and £160 on £800. Gross total: £9,960. If you are unsure which rate applies to a line, check with your accountant before sending.

Rounding pennies

Three lines at £18.47 each. VAT per line is £3.694, rounded to £3.69, so three lines give £11.07. Calculated on the total, £55.41 × 20% = £11.082, rounded to £11.08. One penny looks trivial, but if your quote and invoice use different methods, the figures will not match. Pick one method and use it on both.

Not VAT registered?

If your taxable turnover is below the registration threshold (currently £90,000) and you are not registered, you do not charge VAT and should not show it on the quote. A short note such as "Not VAT registered, no VAT charged" prevents the client from asking.

Checklist

• Totals show net, VAT and gross.
• It is clear whether unit prices include VAT.
• Discounts are applied before VAT.
• Different VAT rates are shown on separate lines.
• Quote and invoice use the same rounding method.
• Not registered? Say so and show no VAT.