There is VAT on ChatGPT in the UK, and who ends up paying it depends on one thing: whether you've given OpenAI a VAT number. If you're a consumer, or a sole trader below the VAT threshold, 20% UK VAT is built into what you pay, and you can't get it back. If your business is VAT registered, you add your VAT number to your ChatGPT billing settings, OpenAI stops charging VAT, and you account for it yourself on your VAT return through the reverse charge. For most businesses that costs nothing at all.
The detail is where people get stuck: invoices that don't mention VAT, invoices that suddenly do, a VAT number in the wrong place, and a VAT return with boxes nobody explained. We'll take each one in turn, with real numbers.
The rules come from HMRC's own VAT notices and OpenAI's help centre and terms, checked in October 2026. It's general information about UK VAT, so ask an accountant about anything specific to your business. The same rules apply to Claude, Gemini and most other AI tools billed from abroad.
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Does ChatGPT charge VAT?
Yes, unless you give it a valid VAT number. OpenAI's terms say UK users buy ChatGPT from OpenAI OpCo, LLC, a company in Delaware. Being based abroad doesn't get it out of UK VAT. GOV.UK's rules for digital services say that anything sold online to UK consumers, software included, is liable to UK VAT, and a seller based outside the UK has to register here and charge it.
HMRC also decides who counts as a consumer. Its place of supply notice tells sellers that if a customer can't provide a VAT number or other evidence that they're in business, the sale should be treated as a sale to a consumer. So a freelancer who signs up with a personal card and no VAT number gets charged VAT like everyone else, even if every chat is client work.
On a price that includes 20% VAT, the VAT is one sixth of the total. If you pay £20 a month, £3.33 of that is VAT and £16.67 is the subscription. Our VAT calculator does the same split for any price: pick Remove VAT, enter what you paid, and it shows both parts.
Not VAT registered? You pay it, and that's the end of it
If your business isn't registered for VAT, there's nothing to do. The VAT is part of the price, you can't reclaim it, and it doesn't go on any return. Most freelancers are in this group, since registration is only compulsory once your taxable turnover passes £90,000.
The good news is on the income tax side. When you claim ChatGPT as a business expense, you claim the full amount you paid, VAT included, because for you the VAT is just part of the cost. A £20 subscription is a £20 expense, not £16.67. We cover how that works, and what it saves, in claiming ChatGPT as a business expense in the UK.
How to add your VAT number to ChatGPT
If you are VAT registered, adding your VAT number is the step that makes everything else work. OpenAI's help centre gives a different route for each kind of account:
- ChatGPT Plus or Pro (individual accounts): on chatgpt.com, select your profile icon, then Settings, then the Account tab. Select Payment, then Manage, and add your Tax ID in your billing information.
- ChatGPT Business: select your profile icon, then Workspace settings, then Billing. Select Settings, then Edit, and add the Tax ID there. Only workspace owners can see the Billing tab, so if it's missing, you're not the owner.
- API: on platform.openai.com, an organisation owner adds it under Billing preferences.
Three things trip people up. The change only applies to future invoices, so the invoices you've already had stay as they are. If you need an old one reissued, OpenAI's help centre says to contact Support with the invoice number. And if the number turns out to be invalid, OpenAI can remove it and start charging tax again, so check your next invoice after you add it.
Enter the number exactly as it appears on your VAT registration certificate. Subscriptions bought through the iPhone or Android app are billed by Apple or Google, so OpenAI's billing settings don't cover them. If you want invoices you can reverse charge, subscribe on the web.
ChatGPT reverse charge VAT on your VAT return
Once your VAT number is on the account, ChatGPT invoices arrive with no VAT on them. That's correct, and it's the source of the most common question on accounting forums: the invoice makes no mention of VAT, so what do you do with it? The answer is the reverse charge.
HMRC applies it when you're a UK business buying services from a supplier based outside the UK, which OpenAI is. Instead of the supplier charging you VAT, you act as both seller and buyer. You charge yourself VAT at 20% on the price, then reclaim the same amount as input tax. It's VAT's version of lending yourself a fiver and paying it back the same afternoon. It sounds pointless, but HMRC wants to see both halves on the return.
HMRC's VAT return guidance lists the four boxes a customer fills in:
Box 4, VAT reclaimed on purchases: £4
Box 6, total sales: add £20
Box 7, total purchases: add £20
Net VAT to pay: £4 − £4 = £0
HMRC's notice puts it plainly: if you can reclaim the input tax in full, the reverse charge has no net cost to you. The one exception is a business that makes VAT-exempt sales, such as some insurance or healthcare work. If you're partly exempt, you may not be able to reclaim the full £4, and the reverse charge then costs you what VAT from a UK supplier would have.
Most accounting software handles this for you. Xero, QuickBooks and Sage all support the reverse charge, usually as a separate VAT rate you pick when you enter the bill. Check the first return afterwards to make sure the figures landed in the boxes above.
When the invoice is in dollars
OpenAI bills UK web subscriptions in pounds, but older subscriptions and API credits can be in dollars. VAT returns are always in sterling. VAT Notice 700 says to convert at the UK market selling rate on the date of the supply, or you can choose to use HMRC's published period rates for all your foreign purchases. Pick one method and use it every time.
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What if OpenAI charged you VAT anyway?
This happens more than it should. A VAT-registered business subscribes without entering its VAT number, or the number doesn't validate, and the invoice shows 20% UK VAT. Some people on accounting forums have been surprised to find VAT on an invoice that had never had any before.
HMRC's guidance covers this case directly. If the reverse charge applies and your overseas supplier issues a VAT invoice on a UK VAT number anyway, you must still apply the reverse charge, because it isn't optional. HMRC's advice is to ask the supplier to correct the invoice. So don't just reclaim the VAT on that invoice as if OpenAI were a UK supplier.
In practice: add or fix your VAT number now so future invoices are right, then contact OpenAI Support with the invoice numbers of the ones that carry VAT and ask for them to be reissued. Until that's sorted, the £3.33 a month in VAT is money you've paid and can't count on getting back.
On the Flat Rate Scheme
The Flat Rate Scheme normally means you never fill in box 4: you pay a fixed percentage of your turnover and don't reclaim VAT on purchases, apart from capital goods costing £2,000 or more. ChatGPT is an exception. HMRC's Flat Rate Scheme notice says services from outside the UK under the reverse charge are dealt with outside the scheme. You leave them out of your flat rate turnover and record them in boxes 1 and 4 as you would under normal accounting.
So the reverse charge nets to zero for flat rate businesses too. Where the scheme does cost you is VAT that OpenAI charges because your VAT number isn't on the account. You can't reclaim input VAT on the scheme, so that VAT stays lost: about £40 a year on a £20 Plus subscription, and about £400 a year on Pro at £200 a month. If you're on the scheme, adding your VAT number is worth five minutes. Whether the scheme still suits you is a separate question, covered in is the VAT Flat Rate Scheme worth it?
VAT on ChatGPT in the EU
The same logic applies across the EU, with a different supplier. OpenAI's terms say users in the EU, the rest of the European Economic Area and Switzerland buy from OpenAI Ireland Ltd. Consumers pay VAT at their own country's rate, since the EU's Your Europe guidance says electronic services are always taxed in the customer's country.
Businesses with an EU VAT number add it in the same billing settings. Under the EU's rules, a business that buys services for business purposes from another EU country declares the VAT itself at its own country's rate, using the reverse charge, and can usually deduct it on the same return. The box numbers differ by country, so check your own country's return or ask your accountant.
Frequently asked questions
Is there VAT on a ChatGPT subscription in the UK?
Yes. UK consumers pay 20% VAT, which is included in the price, so £3.33 of a £20 monthly subscription is VAT. VAT-registered businesses that add a valid VAT number get invoices without VAT and account for it themselves under the reverse charge.
Can you claim VAT on ChatGPT?
Only if you're VAT registered, and only through the reverse charge: you put the VAT in box 1 and reclaim the same amount in box 4, so it nets to zero. If you're not registered, you can't reclaim the VAT, but you can claim the full price, VAT included, as a business expense for income tax.
Is there VAT on a Claude subscription?
Yes, on the same rules. Claude's consumer plans are sold by Anthropic, a US company, so UK consumers pay UK VAT and VAT-registered businesses use the reverse charge. Anthropic's help centre says tax is worked out from your billing address, and for a fixed business address for VAT purposes it asks for your VAT registration certificate through Support.
Why does my ChatGPT invoice have no VAT on it?
Because your account has a valid VAT number, so OpenAI is treating you as a business customer. That's correct, and it means you account for the VAT yourself: 20% of the invoice in box 1 of your VAT return and the same in box 4, with the invoice value in boxes 6 and 7.