Set Up UK VAT on WooCommerce 2026: Full Guide

WooCommerce is the most popular open-source e-commerce plugin for WordPress, powering over 30% of all online stores. Unlike hosted platforms such as Shopify or BigCommerce, WooCommerce gives you full control over your store — but that control comes with full responsibility for tax configuration. VAT is not set up by default, and the platform won’t automatically apply UK VAT until you configure it manually.

Enable Tax Calculations

1. Go to WooCommerce → Settings → General
2. Tick “Enable tax rates and calculations” and save
3. A new Tax tab will appear in your WooCommerce settings

Configure UK Tax Rates

1. Go to WooCommerce → Settings → Tax
2. Set “Prices entered with tax” to your preferred option:
   • “Yes, I will enter prices inclusive of tax” — recommended for B2C stores
   • “No, I will enter prices exclusive of tax” — better for B2B
3. Set “Display prices in the shop” and “Display prices during cart and checkout” to match your choice
4. Under the Standard Rates tab, click Insert row and add:
   • Country code: GB
   • State: leave blank (applies to all of UK)
   • Postcode / ZIP: leave blank
   • City: leave blank
   • Rate: 20.0000
   • Tax name: VAT
   • Compound: leave unticked
   • Shipping: tick if you charge VAT on shipping (you almost certainly do)
5. Save changes

Configuring Zero-Rated Products

Not everything is taxed at 20%. Children’s clothing, most food, books, and some medical products are zero-rated (0% VAT). You still need to include these on your VAT return — they’re not VAT-exempt, they’re just taxed at 0%.

1. Go to WooCommerce → Settings → Tax → Reduced Rate Rates tab (or Zero Rate if you see it)
2. Add a row: Country = GB, Rate = 0, Tax name = Zero-rated VAT
3. Go to each product and change its Tax class from “Standard” to “Zero rate”

This ensures WooCommerce applies 0% VAT to those products and records them correctly for your returns.

Recommended Plugins

WooCommerce’s default setup doesn’t generate VAT-compliant invoices automatically. You’ll need a plugin:

WooCommerce PDF Invoices & Packing Slips — the most widely used free plugin. Generates invoices automatically on order completion and attaches them to customer emails. You’ll need to configure it to show your VAT number and the VAT breakdown on each invoice.

After installing:

1. Go to WooCommerce → PDF Invoices → General
2. Enter your shop name, address, and VAT number
3. Enable invoices to be attached to the order confirmation email
4. Check the invoice template includes net amount, VAT amount, and total — edit the template if needed

EU/UK VAT for WooCommerce — handles B2B VAT numbers (collecting and validating customer VAT numbers for reverse charge), useful if you sell to other businesses. Adds a VAT number field at checkout and applies zero-rating when a valid number is entered.

Enter Your VAT Number on Invoices

Your VAT number must appear on all VAT invoices. Set it in your invoice plugin settings (see above). Also update your WooCommerce → Settings → General store address to ensure it’s complete — this appears on invoices.

Connect to Accounting Software

Once your tax rates and invoice plugin are configured, connect WooCommerce to your accounting software (Xero, QuickBooks, or FreeAgent) using their respective plugins. This pulls sales data in automatically so you don’t have to enter transactions manually when filing your return.

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This is Step 4 of the UK VAT Setup Checklist. Continue to Step 5: set up invoicing →