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I see on job sites that many contract positions advertise a certain hourly or daily rate.

Do those rates normally include the VAT?

If this is country specific, I primarily interested in the UK.

NivF007
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gabox01
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3 Answers3

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You have to ask a specific client about this. Some do include all fees, some not. There is no rule.

The only truth is that if you don't ask, they will pay you offered price and handle the fees yourself. The only way to prevent this is to ask them.

WillyWonka
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Peter MV
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  • VAT isn't a 'fee' it's a tax and as such is usually not included in advertised contract rates - see my answer for more details. – Phil Haigh Apr 24 '14 at 14:31
  • Yes, usually not in advertisements. But I've seen that many freelancers simply tell its price including VAT and all other costs. – Peter MV Apr 24 '14 at 17:30
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    A freelancer might do that if quoting for a fixed price project. However the question was about rates for contract positions advertised on job sites, which will always be exclusive of VAT. 25 years working both permanent and freelance in the UK IT industry informs this statement. – Phil Haigh Apr 25 '14 at 09:49
  • @Phil I believe you :). – Peter MV Apr 25 '14 at 09:54
  • @PhilHaigh thank you for helping understand what is the common practice. Just for a double check since I am not in London and should work remotely : are this rates VAT included or NOT ? To your knowledge, are these values and web source reflecting reality ? https://www.itjobswatch.co.uk/contracts/uk/data%20scientist.do – user305883 Feb 28 '21 at 20:15
  • If you are working through a limited company, all rates discussed will be exclusive of VAT. Agencies won't event pay you VAT until you've given them a copy of your VAT registration certificate. If your turnover is high enough, using a limited companyand registering for VAT is a legal requirement. – Phil Haigh Mar 02 '21 at 10:09
  • If your turnover is below the VAT registration threshold and you're genuinely self employed (eg small web developer business) then you won't have a limited company or be charging VAT. – Phil Haigh Mar 02 '21 at 10:13
  • As for the link you've posted - yes these numbers look to be in the ballpark, bearing in mind that this would be the rate for somebody clearly qualified to take the role (has enough relevant experience). If you have a more appropriate CV and longer/deeper experience then you can command a better rate. Conversely if you're at the bottom end of the experience the client is looking for, expect to command a lower rate. – Phil Haigh Mar 02 '21 at 10:16
  • In general remote working commands a lower day rate although this isn't a philosophy I personally agree with, since my ability to do the job hasn't changed and the client doesn't have the expense of providing a physical working area for me. – Phil Haigh Mar 02 '21 at 10:18
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Contract positions, almost without exception, are advertised exclusive of VAT. I say 'almost' but in several years of freelance working I've never been presented with a rate that was inclusive of VAT.

The reason for this is that everybody in the chain of employment - the client, the agent (if there is one) and the contractor are all VAT registered. Each company is claiming back from HMRC the VAT they pay to their suppliers. So when publishing and discussing rates, figures can be assumed to be net (VAT exclusive) unless otherwise stated.

That said, it is possible that an agency might deliberately fail to tell you that the figure you are discussing is gross (VAT inclusive) while you think it is net (VAT exclusive). To avoid this potential issue (again, this hasn't happened to me) I make it clear in all written correspondence that my rates are exclusive of VAT. There's no harm in spelling it out. It'll also be specified in your contract. When I deal with a new agency I ask for a 'specimen contract' so that I can review their business terms, and this is one of the points I check (of course once I have an offer on the table I'll get the contract checked for IR35 compliance).

Phil Haigh
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Rates are usually quoted excluding VAT, because your VAT registered status will determine whether you should charge it or not.

More info on the VAT threshold here:

http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm#2

DaveRead
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