How do you barter services as a small business? Agree what each side's work would cost in cash, write down exactly what's being swapped and by when, then record it as a sale, because that's how HMRC sees it. Swaps go well when both sides run them like paid jobs, and they go wrong when they're treated as favours.
How do you barter services fairly?
Most barter guides online are about swapping things, like a bike for a sofa or an old phone for a games console, and services are harder. You can see a sofa. You can't see "help with my books" until someone has put the hours in, and by then each of you has your own idea of what those hours were worth.
That's why we'd always settle a cash price before anyone starts. It means you're both measuring the swap with the same yardstick, you find out straight away whether it's even, and you end up with the figure you'll need for your records later. Without a price, the trader who feels short-changed rarely says anything. Instead they do the rest of the work a little more slowly, and a good relationship sours without a word being said.
Put a number on both sides before you agree anything
Say a bookkeeper and a web designer want to swap. A 2025 guide from Better Account puts freelance bookkeepers at £25 to £40 an hour, with London rates higher1, and O'Brien Media prices a 5 to 10 page brochure website at £1,000 to £3,0002. If the designer would normally quote £1,800 for a six-page site and the bookkeeper charges £30 an hour, the website is worth 60 hours of bookkeeping, which at five hours a month is a full year of monthly books.
Those sums show you things a handshake won't. The website might be finished in six weeks while the bookkeeping runs for twelve months, so one side delivers up front and the other is in effect paying in instalments, and that gap is where most of the risk sits. If the numbers don't line up, we wouldn't try to stretch them to fit. Trim the scope or top up the difference in cash instead. And use the price you'd charge a stranger rather than a mate's rate, because that's also the figure HMRC expects.
Agree the scope and deadlines in writing
Most swaps come unstuck over scope, meaning the exact list of what's included. "A website" could mean five pages or fifteen, with or without the words written for you, with two rounds of changes or unlimited ones. "Doing the books" could mean matching up the bank statements each month, or that plus VAT returns and chasing missing receipts.
For most small swaps, an email that you both reply "agreed" to will do, and it doesn't need to be long. Say what each side delivers and by what date, how many rounds of changes are included and what happens if one of you needs to pause. We'd also agree how you'd end it fairly if it isn't working, for example by paying cash for whatever has already been done. For anything large or long-running, ask a solicitor to look over the terms before you start.
Do you have to pay tax on bartered goods and services?
Usually, yes. HMRC's own manual lists the "value of any payments 'in kind' for work done or goods sold" as a business receipt3, so in our example the bookkeeper has £1,800 of income in the form of a website, and the designer has income worth a year of books. Startups.co.uk explains that fair market value is what you'd charge if you were selling the service for cash, and that sole traders include it on their self assessment return, the yearly form where you report your earnings to HMRC4.
VAT adds another layer. Registration becomes compulsory once your taxable turnover goes over £90,000 in 12 months5, and if either business is VAT registered, each side is making a supply and VAT applies as if money had changed hands. Startups gives the example of two VAT-registered firms swapping work valued at £1,000 each, where each still accounts for £200 of VAT4. In fact, even HMRC admits that valuing barter can be awkward, noting that "a difficulty arises when each party has good reason for ascribing a different value to the consideration"6, which is one more reason to put the agreed figure in writing at the start. This is general information rather than advice, so talk to your accountant about your own situation before you swap.
Isn't all this too formal for a favour between traders?
It's a fair objection. Plenty of good swaps start over a coffee, and sending a written scope to the electrician who sorted your shop lights last winter can feel a bit cold. Some swaps are small enough that a handshake really is fine, and we wouldn't bother with paperwork for those.
The trouble is that disputes are expensive even when there's an invoice to point at. The Federation of Small Businesses' 2016 report, Tied Up, found that 70 per cent of small firms had faced at least one dispute in recent years, with an average of £18,000 at stake7, and a swap with nothing written down gives you even less to go on. A short email agreeing the details keeps the goodwill intact, because neither of you has to guess what the other meant.
Where can you find a good swap partner?
The best matches pair someone who needs a skill with someone who has spare time to offer, not just enthusiasm. We'd start with people you already trade alongside, like the suppliers you rate or the faces at your local business breakfast, and ask what they're struggling to pay for. Online, Exchange of Services lets UK businesses browse the services other members offer or post a request for something you need, locally, regionally or remotely, and members agree the details in a message thread before the person who posted accepts one response. Wherever you find someone, check their past work the way you would with any paid supplier, because a swap that costs you nothing in cash can still cost you plenty if the work isn't up to scratch.
A swap is still a sale
Bartering lets a business with more skill than spare cash get a website, a set of accounts or a photo shoot without paying out money it doesn't have. Price it, write it down and record it, and it can turn out to be a good deal for both sides. Exchange of Services is free to join, with no fees or commission.
Join free and list the services you can offer
Frequently asked questions
How do you barter?
Agree what each side's goods or services would cost in cash, so you both know whether the swap is even. Write down exactly what each person delivers and by when, then record the swap as a sale in your books, because HMRC treats payments in kind as business income.
Do you have to pay tax on bartered goods?
Generally, yes. HMRC counts the value of payments in kind for work done or goods sold as a business receipt, and VAT can apply if either business is VAT registered. Bartering doesn't get you out of tax or VAT, so ask your accountant how it applies to you.
Is the barter system still practiced?
Yes. UK businesses, sole traders and freelancers still swap services, for example bookkeeping for a website. HMRC keeps current guidance on how to value barter transactions for VAT and on counting payments in kind as income, which shows it's still common enough to need rules.
How do you value a service in a swap?
Use the price you'd charge a stranger paying cash, which is the fair market value, rather than a discount for a friend. Turn both sides into pounds, for example hours at your usual hourly rate against a fixed quote, and if the figures don't match, trim the scope or top up the difference in cash.
What usually goes wrong with a service swap?
Most problems come from a vague scope, such as how many pages or rounds of changes are included, and from timing, when one side delivers up front and the other over months. Agreeing the details by email before you start, including how to end the swap fairly, prevents most of them.
Sources
- Better Account: What is the hourly rate for a bookkeeper in the UK betteraccount.co.uk
- O'Brien Media: How much should a web designer cost? Web design pricing in 2025 obrienmedia.co.uk
- HMRC Business Income Manual: BIM72015 Cash basis receipts overview gov.uk
- Startups.co.uk: How is tax applied to bartering? startups.co.uk
- GOV.UK: Register for VAT, when to register gov.uk
- HMRC VAT Valuation Manual: VATVAL05900 Barter transactions, valuation when each supply has a different value gov.uk
- Punchline Gloucester: Disputes over late payments costing small businesses billions of pounds (FSB Tied Up report) punchline-gloucester.com
