Use this free UK VAT calculator to add or remove VAT at any rate — instantly. Enter a net amount to add VAT, or use it as a reverse VAT calculator to remove VAT from a gross price and find the net amount. Works for the standard 20% rate, reduced 5% rate, or any custom rate. See the net amount, VAT amount and gross amount in a clear breakdown. The UK VAT registration threshold in 2026 is £90,000. Updated May 2026. No sign-up. Instant results.
VAT (Value Added Tax) is a consumption tax added to most goods and services sold in the UK. The standard rate is 20% and applies to most products and services. The reduced rate is 5% and applies to domestic energy, children's car seats, and some health products. A zero rate (0%) applies to most food, children's clothing, books, and public transport. To add VAT: multiply the net price by 1.20 (for 20%). To remove VAT from a gross price: divide by 1.20. For example, a net price of £100 becomes £120 including VAT. A gross price of £120 has a net price of £100 and VAT of £20. Businesses must register for VAT once their taxable turnover exceeds £90,000 in any 12-month period.
| Net (ex-VAT) | VAT (20%) | Gross (inc-VAT) |
|---|---|---|
| £50 | £10 | £60 |
| £100 | £20 | £120 |
| £250 | £50 | £300 |
| £500 | £100 | £600 |
| £750 | £150 | £900 |
| £1,000 | £200 | £1,200 |
| £2,500 | £500 | £3,000 |
| £5,000 | £1,000 | £6,000 |
| £10,000 | £2,000 | £12,000 |
VAT (Value Added Tax) is collected at each stage of the supply chain but ultimately paid by the end consumer. Here's how the calculation works, what the different rates apply to, and what businesses need to know about registration and reclaiming.
VAT is expressed as a percentage of the net (ex-VAT) price. Adding or removing it uses slightly different calculations — a common source of errors.
Multiply the net price by (1 + VAT rate). For 20%: net × 1.2. For 5%: net × 1.05. The result is the gross (VAT-inclusive) price. The VAT amount is gross minus net.
Divide the gross price by (1 + VAT rate). For 20%: gross ÷ 1.2. For 5%: gross ÷ 1.05. Do NOT just take 20% off the gross — this is wrong and gives a different answer.
The reason: VAT is 20% of the net, not 20% of the gross. On a £120 gross price, the VAT is 1/6 of £120 = £20, not 20% of £120 = £24. This is why the ÷ 6 shortcut works for standard rate.
The UK has three positive VAT rates plus the exempt category. Understanding which applies is important for both businesses and consumers.
Applies to most goods and services not in another category. Includes most clothing (adults), electronics, professional services, restaurant meals, alcohol, and most retail goods.
Domestic fuel and power, children's car seats, mobility aids for older people, renovating empty properties, and some energy-saving materials. Has expanded in scope over recent years.
Most food and soft drinks, children's clothing and footwear, books, newspapers, public transport, prescription medicines, and most exports. VAT-registered sellers can still reclaim VAT on inputs.
Financial services, insurance, education, health services, burial/cremation, and residential property rental. Different from zero-rated — businesses making exempt supplies cannot reclaim VAT on their costs.
VAT registration is mandatory once you cross the threshold — and voluntary registration can be beneficial even below it.
You must register if your taxable turnover exceeds £90,000 in any rolling 12-month period. Register within 30 days of exceeding the threshold. Failure to register on time incurs penalties.
You can register voluntarily below £90,000. Benefit: you can reclaim VAT on business purchases. Downside: you must charge VAT to customers, which may make you uncompetitive if they're non-VAT-registered consumers.
Once registered, you must: charge VAT on taxable supplies, submit VAT returns (usually quarterly via Making Tax Digital), pay any VAT owed to HMRC, keep VAT records for at least 6 years, and display your VAT registration number on invoices.
Understanding which VAT rate applies to your goods or services is one of the most common questions for UK businesses. The distinction between zero-rated and exempt is particularly important — they look the same to the customer (no VAT charged) but have very different implications for businesses.
| VAT treatment | Rate charged | Common examples | Can reclaim input VAT? |
|---|---|---|---|
| Standard rated | 20% | Most goods and services — clothing (adult), electronics, software, professional services, alcohol, confectionery, takeaway hot food | ✅ Yes |
| Reduced rated | 5% | Domestic energy (gas, electricity), children's car seats, mobility aids, smoking cessation products, sanitary products, contraceptive products | ✅ Yes |
| Zero rated | 0% | Most food and non-alcoholic drinks, children's clothing and footwear, books and newspapers, public transport, prescription medicines, exports outside the UK, most residential construction | ✅ Yes |
| Exempt | None | Financial services (bank accounts, loans, insurance), education, health services, residential property rental, postage stamps (Royal Mail), burial and cremation | ❌ No |
| Outside scope | N/A | Wages and salaries, charitable donations, MOT tests, road fund licence, congestion charge, dividends | ❌ No |
Source: HMRC. VAT treatment can vary by specific circumstances — always verify with HMRC or a qualified accountant for formal advice. The distinction between zero-rated and exempt is critical for businesses: zero-rated supplies count toward your VAT registration threshold and allow you to reclaim input VAT; exempt supplies do not count toward the threshold and do not allow reclaims.
The VAT Flat Rate Scheme (FRS) is a simplified VAT accounting method available to businesses with taxable turnover up to £150,000 per year (excluding VAT). Instead of calculating VAT on every sale and purchase, you pay a fixed percentage of your gross (VAT-inclusive) turnover to HMRC.
You still charge customers the standard 20% VAT, but you pay HMRC a lower flat rate — keeping the difference. The flat rate percentage varies by business sector. Under the FRS you cannot reclaim VAT on purchases (except capital assets over £2,000).
| Business sector | Flat rate % |
|---|---|
| Accountancy or bookkeeping | 14.5% |
| Advertising | 11% |
| Catering services including restaurants | 12.5% |
| Computer and IT consultancy | 14.5% |
| Construction — general building or construction | 9.5% |
| Hairdressing or other beauty treatment services | 13% |
| Management consultancy | 14% |
| Retailing of food, confectionery, tobacco, newspapers | 4% |
| Transport or storage — including couriers | 10% |
| Limited cost trader (any sector, low costs) | 16.5% |
Source: HMRC VAT Flat Rate Scheme. Full list of sector percentages available at gov.uk. The FRS may not be beneficial for all businesses — compare your actual VAT liability before joining. A qualified accountant can advise whether the scheme suits your situation.