VAT on Services From an Overseas Supplier: UK 2026 Guide

This guide is updated November 2026: the rule today, the April 2027 change, paying in pounds, what the invoice should show, and how White Gold Technologies works with UK clients.

The rule today: the reverse charge

Most web design and software work is a service supplied business to business. HMRC's guide on the place of supply of services sets the general rule: when the customer is a business, the place of supply is where the customer belongs. For a UK business that is the UK, even though the work is done in India.

Because the supplier belongs outside the UK, the supplier does not charge UK VAT. The VAT is accounted for by you, the buyer. This is the reverse charge. In practice it is two entries on the same VAT return:

1. Work out UK VAT on the full value of the invoice and include it as output tax in box 1.
2. Claim the same amount back as input tax in box 4, under the normal rules for what you can reclaim.
3. Put the full value of the invoice in box 6 and in box 7.

For a business that can reclaim all its VAT, the two entries cancel out. Your accountant will file it. The invoice itself shows no UK VAT, and that is correct.

If your business is not VAT registered

If you trade below the threshold and are not registered, you pay no UK VAT on an overseas invoice today. There is one catch.

GOV.UK's page on when to register for VAT sets the threshold at £90,000 of taxable turnover. Its list of what counts towards that turnover includes services you received from businesses in other countries that you would have had to reverse charge. So a website or software project bought from India is added to your own sales when you check whether you have crossed the threshold.

If your sales are close to £90,000, a larger web or software project can tip you over. Plan the timing of a big project with your accountant in view of your figures for the year.

What changes on 1 April 2027

HMRC has published a policy paper, Reform of the business to business reverse charge for supplies of services from overseas, dated 28 October 2026. It says the measure will take effect from 1 April 2027.

From that date the reverse charge applies only when the buying business is actually registered for VAT in the UK. When the UK customer is not VAT registered, the overseas supplier will be required to charge UK VAT and account for it to HMRC.

What this means for you:

• VAT-registered UK business: nothing changes in practice. You keep using the reverse charge on your return.
• Unregistered UK business: from 1 April 2027, expect UK VAT on invoices from overseas suppliers of services. The paper says the cost of purchases rises for these businesses, since they cannot reclaim it.
• Every UK buyer: your supplier will ask for your VAT number, because that is now the test. The paper says suppliers will only need to check whether the customer has one. Send it with your first order.

If a project starts before April 2027 and runs past it, ask how invoices raised after 1 April will be treated. A clear supplier will answer in writing before you sign.

Paying an Indian web agency in pounds

You do not need an account in India or a payment in rupees. The simplest options are:

• Bank transfer in GBP: from your UK business account to the agency's account, using the bank details printed on the invoice. Check the fees your bank charges for an international payment before you send.
• Wise: many UK businesses pay overseas suppliers through Wise. You pay in pounds and the supplier receives the money in its account. Compare the total cost with your bank on the day.

Pay against an invoice, never against a message giving new bank details. If details change, confirm on a call with someone you know.

What a proper invoice from an Indian company shows

A clear invoice makes your bookkeeping and your VAT return easy. Look for:

• The supplier's full registered company name and address in India.
• A unique invoice number and the invoice date.
• Your business name and address, and your VAT number if you are registered.
• A plain description of the work, such as "Milestone 2: design and build of the online shop", not just "IT services".
• The amount in GBP, matching the quote you accepted.
• The bank details for payment.
• No UK VAT line while the reverse charge applies to you. Your accountant enters the VAT on your return.

How White Gold Technologies works with UK clients

White Gold Technologies is a web and software company in Alwar, Rajasthan, India, working since 2013. In 12+ years we have built for 1,200+ clients: business websites, redesigns, Shopify and WooCommerce stores, billing, stock and ERP software, SaaS products and apps.

For UK clients we keep the money side simple:

• Quote and invoice in GBP. You see one figure in pounds before work starts, and the invoice matches it.
• Fixed price per milestone. The project is split into stages such as design, build and launch. You pay for each stage when it is delivered, not by the hour.
• Invoices that follow the rules in force at the time. Every invoice is raised under the VAT rules that apply on its date, including after the April 2027 change, and we ask for your VAT number at the start.
• You own everything. The domain is in your name, and the code and all logins are handed over to you.

India is 4.5 hours ahead of the UK in British Summer Time and 5.5 hours ahead in winter. Our studio runs from 09:00 to 21:00 IST, Monday to Saturday, so a call in your morning or early afternoon falls inside our working day. Reviews happen on video calls, and WhatsApp covers the rest, including after hours.

See how we work with UK businesses on our UK web development page, or our work for all countries on the Global page.

Frequently asked questions

Do I pay VAT on an invoice from an Indian web company?

If you are VAT registered in the UK, the invoice carries no UK VAT and you account for it under the reverse charge on your VAT return. If you are not registered, you pay no UK VAT on it today. From 1 April 2027, an overseas supplier will charge UK VAT to UK businesses that are not VAT registered.

Does an overseas invoice count towards the UK VAT threshold?

Yes. GOV.UK lists services received from businesses in other countries that would fall under the reverse charge as part of your taxable turnover. They count towards the £90,000 threshold along with your own sales.

Will a VAT-registered business notice the April 2027 change?

Very little. The reverse charge continues for VAT-registered buyers. The main difference is that suppliers will ask for your UK VAT number to decide whether to charge VAT, so keep it on file with them.

Can I pay an Indian agency in pounds?

Yes. You can pay in GBP by bank transfer or through Wise, against an invoice issued in pounds. White Gold Technologies quotes and invoices UK clients in GBP.

Talk to White Gold Technologies

Planning a new website, an online shop or software for your UK business? Call or WhatsApp us on (+91) 9414-909092, email contact@wgtechsoft.com, or send your brief through our contact page. You will get a fixed price per milestone, in pounds. Read more on our UK web development page.

<!-- Sources checked 10 Nov 2026: GOV.UK VAT Notice 741A section 5 (reverse charge, return boxes); GOV.UK when to register (threshold 90,000 GBP, reverse-charge services count); HMRC policy paper 28 Oct 2026 (reform from 1 April 2027). -->