It does not apply where there is a single supply and the main part of it is zero-rated.
On a contract worth £100,000, a reverse charge part of up to £5,000 is within the 5%.
Reverse charge checker
What is the 5% rule for the reverse charge?
If the reverse charge part of a supply is 5% or less of the whole supply value, it can be disregarded and VAT charged in the normal way. Both the supplier and the customer must agree, and it is judged on the whole contract, never invoice by invoice.
Free, with no sign-up. Everything is worked out in your browser: nothing you type is sent to us or stored. A guide, not tax advice. Based on GOV.UK guidance checked on 31 October 2026. Your customer's written confirmation of end user status is what counts, not an assumption.
Does the reverse charge apply to this invoice?
Answer in order. The first answer that settles it gives the result.
Keep going.
The reverse charge applies.
The reverse charge does not apply. The supplier charges VAT in the normal way.
The reverse charge does not apply. The work is zero-rated.
No VAT to charge or reverse.
The invoice must say the reverse charge applies and how much VAT is due under it, without adding that VAT to the amount charged. For example: VAT Act 1994 Section 55A applies. Customer to pay the VAT to HMRC.
- VAT due under the reverse charge
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