VAT calculator

UK VAT rates explained

Value Added Tax (VAT) is a consumption tax applied to most goods and services in the United Kingdom. There are three main VAT rates:

• Standard rate (20%) — applies to most goods and services. This is the default rate used in the calculator above and covers everything from electronics and clothing to professional services and hospitality.
• Reduced rate (5%) — applies to domestic fuel and power, children's car seats, sanitary products and certain home renovation work under the VAT relief scheme.
• Zero rate (0%) — applies to essential items including most food, children's clothing and footwear, books and newspapers, public transport and prescription medicines.

Some items are exempt from VAT entirely (such as insurance, education and healthcare), which means no VAT is charged and the supplier cannot reclaim VAT on related purchases.

— When to add vs remove VAT

Understanding whether you need to add VAT or remove VAT depends entirely on the numbers you are working with.

• Add VAT — use this when you have a net price (excluding VAT) and need to know the gross total the customer should pay. This is the most common scenario for VAT-registered businesses creating invoices or setting selling prices. The formula is: gross = net × (1 + rate/100).
• Remove VAT — use this when you have a gross price (including VAT) and need to extract the underlying net amount. This is useful when analysing supplier invoices, comparing VAT-inclusive prices or preparing VAT returns. The formula is: net = gross / (1 + rate/100).

For example, a £100 net product at 20% VAT gives a £120 gross total (add VAT). A £120 gross receipt at 20% VAT gives a £100 net cost (remove VAT).

A common mistake when removing VAT is subtracting 20% from the gross price instead of dividing by 1.2. On a £120 gross price, subtracting 20% gives £96 — which is wrong. The correct net is £120 ÷ 1.2 = £100. The VAT portion of a 20%-inclusive price is always one-sixth of the gross, not one-fifth.

VAT at 20% on common amounts

Net (excl. VAT)	VAT at 20%	Gross (incl. VAT)
£10.00	£2.00	£12.00
£50.00	£10.00	£60.00
£100.00	£20.00	£120.00
£250.00	£50.00	£300.00
£500.00	£100.00	£600.00
£1,000.00	£200.00	£1,200.00

Read the table left-to-right to add VAT, or right-to-left to remove it from a gross figure.

VAT registration threshold

The UK VAT registration threshold is £90,000 in taxable turnover over a rolling 12-month period. Key points to be aware of:

• If your VAT taxable turnover exceeds £90,000, you must register for VAT with HMRC.
• Registration is per legal entity, not per business — if you own multiple companies, each is assessed independently.
• You can voluntarily register below the threshold, which allows you to reclaim VAT on business purchases. This can be beneficial if your suppliers charge VAT and you sell to VAT-registered customers.
• Once registered, you must charge VAT on your taxable supplies and submit VAT returns, typically quarterly.
• There are special schemes for small businesses, including the Flat Rate Scheme and Annual Accounting Scheme, which can simplify VAT administration.

The threshold is reviewed by HMRC periodically. Use our take-home pay calculator to understand the wider tax impact on your earnings.

What this calculator does not include

• Non-UK VAT — this uses UK rates. EU member states each set their own VAT rates (typically 17–27%), and the US uses sales tax rather than VAT entirely.
• Mixed-rate baskets — the calculator applies one rate at a time. An invoice mixing standard-rated and zero-rated items needs each line calculated separately.
• Flat Rate Scheme — businesses on HMRC's Flat Rate Scheme pay a fixed percentage of gross turnover rather than the standard VAT calculation shown here.

Frequently asked questions

What is the current UK VAT rate?

The current standard UK VAT rate is 20%, which applies to most goods and services. Reduced rates of 5% apply to domestic fuel and energy, children's car seats and home renovations. Zero-rated items (0%) include most food, children's clothing, books and public transport.

When should I add VAT?

Add VAT when you have a net price (excluding VAT) and need the gross price including VAT for invoicing a customer. This is the standard calculation for UK VAT-registered businesses issuing invoices.

What is the VAT registration threshold?

The UK VAT registration threshold is £90,000 in taxable turnover over a rolling 12-month period. Exceed this and you must register with HMRC. You can voluntarily register below the threshold.

Can I reclaim VAT on purchases?

Yes, VAT-registered businesses can reclaim VAT on most business purchases, supplies and expenses. This includes stock, equipment, professional fees and business travel. You cannot reclaim VAT on personal purchases or certain exempt supplies.

How do I work out the VAT on a VAT-inclusive price?

Divide the gross price by 6 for the standard 20% rate — the VAT is one-sixth of a 20%-inclusive total. On £120 gross, the VAT is £20 and the net is £100. Do not subtract 20% from the gross, which gives the wrong answer.

What's the difference between zero-rated and VAT-exempt?

Both mean no VAT is charged to the customer, but zero-rated suppliers can still reclaim VAT on their own business purchases, while exempt suppliers cannot. Most food and children's clothing are zero-rated; insurance, education and healthcare are exempt.