For a company in the United Kingdom, cloud cost meets the pound in three places: the invoice currency, UK VAT, and the rates at which dollar amounts are converted for the VAT return and for the management report. Since leaving the EU, the UK applies its own VAT rules, set out by HMRC. This page shows how the providers bill UK customers, what HMRC writes on the reverse charge and foreign currency, and why one invoice can give two correct pound figures. The general tax mechanics of cloud invoices are covered in VAT and reverse charge on cloud invoices; which treatment applies to your company is for your tax adviser.
How it works
Which company bills UK accounts, and why, is covered in the cloud provider's EU billing entity and contract; for pounds and UK VAT the providers document the following.
AWS
UK accounts are billed by the UK branch of Amazon Web Services EMEA SARL. AWS states that the branch is not a subsidiary but the same legal entity as the Luxembourg headquarters, and that it is treated as a local vendor for VAT. It charges VAT on accounts located in the UK unless a special status applies, as for international organisations, and provides tax invoices on the Bills page. AWS locates each account separately at every invoicing, from its tax registration number, billing address and contact address. Certain telecommunications services are sold by AMCS LLC, a different Amazon entity: it charges UK VAT only to accounts without a valid tax registration number, and notes that customers with one may have to self-assess. AWS Europe supports the pound as payment currency, with Bacs direct debit from a UK bank account.
Azure
Microsoft lists the United Kingdom among the countries of its Limited Risk Distributor model: customers on a Microsoft Customer Agreement buy there from a local Microsoft subsidiary. For a UK legal address, the billing currency is the pound. Microsoft calculates cost in US dollars and converts it at a London closing spot rate from the last business days of the previous month, which holds for the whole month. Tax type and amount follow the country of the billing profile.
Google Cloud
For billing addresses in EMEA outside France, Italy and Poland, Google names Google Cloud EMEA Limited in Dublin as the contracting entity, which covers UK customers. Google states that usage by customers in the United Kingdom is subject to 20% VAT. Self-serve accounts in the UK are billed in pounds and pay by card or bank account; a Cloud Billing account's currency cannot be changed after it is created.
What HMRC describes
In VAT Notice 741A, HMRC's reverse charge applies when, among other conditions, the place of supply is the UK, the supplier belongs outside the UK and the customer belongs in the UK. On the VAT return, HMRC places the tax in box 1 and as input tax in box 4, and the full value in boxes 6 and 7. Whether a provider belongs in the UK for a given supply is a question for your tax adviser; the providers only document how they bill.
For foreign currency, Notice 741A points to the VAT guide, Notice 700, whose section 7.6 has force of law and requires every VAT amount in pounds sterling. The default is the UK market selling rate at the time of supply. Alternatively, a business may use the period rate HMRC publishes for customs, for all supplies or a class of them, and leave it only with HMRC's written agreement; its own commercial rate needs a written application. HMRC publishes the monthly rates on the penultimate Thursday of each month for the following calendar month, as rates at midday on the day before publication.
What it means for your cost
In a UK company a dollar invoice easily yields two pound figures: the VAT return's and the management report's. With HMRC's period rate in the return and a central bank rate in the report, the two differ by the gap between the rates, not by usage. The period rate is fixed in the previous month; the example shows how wide the gap was in September 2026. An invoice already in pounds carries the provider's rate, and report, invoice and return reconcile only if every amount names its rate.
Where the provider charges UK VAT, it sits as a line of its own in the billing data. A report that counts it makes the UK company look more expensive by the VAT rate than a company whose invoice carries no VAT, for the same usage. Whether VAT is a cost for your company is for your tax adviser; the report only says whether it shows net or gross. For a group report in euros the pound amount is converted once more; how the euro and pound views fit together is covered in EUR and GBP cloud cost reporting, side by side.
Checklist for the UK company:
- Check the invoicing entity and tax registration number per account, and at AWS the Tax Address of every member account.
- Record the payment currency per provider: at AWS per seller, at Azure from the legal address, at Google per billing account.
- Record rate source and date for every pound figure, separately for the report and for VAT.
- Treat tax lines the same way for every company in the cost report, included or excluded.
- Settle tax questions, including the rate method for the return, with your tax adviser.
Where it goes wrong
- Return and report on different rates. Symptom: the report's pound total for the cloud invoices differs from the VAT return's. Cause: the report uses an average or month-end rate, the return HMRC's period rate or the market rate at the time of supply. Which method the return may use is for your tax adviser; the report names its rate.
- Tax counted as cost. Symptom: the UK company looks more expensive than a comparable one in the euro area. Cause: the VAT lines of the UK invoice sit in the cost report, while the other company's invoice carries none.
- UK accounts in euros without a rate. Symptom: the UK company's cost fluctuates in the group report although its pound report is flat. Cause: the pound amounts were converted into euros at an unnamed, changing rate.
- Payment currency changed, history not. Symptom: from one month the invoices arrive in pounds, before that in dollars. Cause: at AWS a new payment currency applies to new invoices only, and at Google another currency needs a new billing account; earlier months stay in the old currency.
Example
A UK company receives an invoice for A US dollars for September 2026. Three published rates give three pound figures:
| Rate for September 2026 | US dollars per pound | Pound figure | Gap to the HMRC rate |
|---|---|---|---|
| HMRC monthly rate | 1.3554 | 0.7378 × A | reference |
| Bank of England, monthly average | 1.3415 | 0.7454 × A | +1.0% |
| Bank of England, 30 September | 1.3285 | 0.7527 × A | +2.0% |
The HMRC rate for September reflects the market in August and sits above the Bank of England's September average, so it gives the smallest pound figure. Which methods VAT allows is set out in Notice 700; which applies to your company is for your tax adviser.
Sources
Read on 2026-10-16. AWS Tax help: United Kingdom, AWS Europe FAQs, Managing your Bacs direct debit payment method, Customizing your AWS payment preferences and Using payment profiles; Microsoft Understand your Microsoft Customer Agreement invoice and Microsoft Customer Agreement FAQ; Google Google contracting entity, Taxes in your country and Currencies available for Cloud Billing self-serve, auto-pay accounts; HMRC Place of supply of services (VAT Notice 741A), VAT guide (VAT Notice 700), section 7.6 on foreign currency, Monthly exchange rates and September 2026 monthly exchange rates; Bank of England Monthly averages and end-of-month values for USD and EUR per pound, August and September 2026.