UK VAT Calculator £ Add or Remove VAT
Add VAT to a net price or extract VAT from a VAT-inclusive (gross) price. Covers UK standard rate (20%), reduced rate (5%), and zero rate (0%) with a side-by-side rate comparison.
📅 HMRC VAT rates — updated January 2026🇬🇧 UK VAT Rates Reference
Indicative rates only — verify with HMRC for your specific goods/services.
| Rate | % | Applies To |
|---|---|---|
| Standard Rate (20%) | 20% | Most goods & services, electronics, clothing, furniture |
| Reduced Rate (5%) | 5% | Home energy, children's car seats, sanitary products, some renovations |
| Zero Rate (0%) | 0% | Food (most), children's clothing & footwear, books, newspapers, public transport |
🔢 VAT Formula
Example (20%): Net £100 → VAT £20 → Gross £120. Reverse: Gross £120 ÷ 1.20 = Net £100.
UK VAT Guide: Rates, Registration, and Returns
VAT (Value Added Tax) is the UK's primary consumption tax, charged at each stage of the supply chain with businesses reclaiming the VAT they pay on inputs. The end consumer ultimately bears the full VAT cost. Unlike US sales tax, UK VAT is included in displayed prices — the £10 sticker price includes VAT; in the US, tax is added at checkout.
UK VAT Rates (2025)
- Standard rate: 20% — applies to most goods and services
- Reduced rate: 5% — home energy (gas, electricity), children's car seats, sanitary products, some renovation work
- Zero rate: 0% — most food, children's clothing, books, newspapers, prescription drugs, most public transport
- Exempt: Financial services, insurance, health services, education — no VAT charged and no input VAT reclaimed
VAT Registration Threshold
Businesses must register for VAT once their taxable turnover exceeds £90,000 in any rolling 12-month period (as of 2024/25). Voluntary registration is possible below this threshold — beneficial if you sell to other VAT-registered businesses (they can reclaim the VAT you charge) or if your input VAT is significant. Once registered, you must charge VAT, file quarterly VAT returns, and pay VAT to HMRC.
UK VAT Rates and When They Apply
The UK has three VAT rates. Standard rate (20%) applies to most goods and services. Reduced rate (5%) applies to: domestic fuel and power (gas, electricity), children's car seats, energy-saving materials installed in residential properties, and certain social housing renovations. Zero rate (0%) applies to: most food and drink (except alcohol, soft drinks, and items sold in restaurants), children's clothes and shoes, books and newspapers, public transport, and most prescription medicines. Exempt supplies (not VAT) include: postage stamps, insurance, financial services, and private education. The key difference between zero-rated and exempt: a VAT-registered business charging 0% can still reclaim input VAT on its purchases; a business making only exempt supplies cannot.
VAT Registration for UK Businesses
You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period (2024/25 threshold — this figure changes annually). You can also voluntarily register below this threshold, which lets you reclaim VAT on business purchases — beneficial if you buy significant VAT-inclusive supplies. Registration is done through HMRC's online portal, and you'll receive a VAT number within 10–30 days. Once registered, you must: charge VAT on taxable supplies, file VAT returns (usually quarterly), and make payments via Making Tax Digital (MTD) compatible software. Late registration penalties can reach 15% of VAT due from the date you should have registered — worth checking your turnover regularly.
The Flat Rate Scheme: A Simpler Option for Small Businesses
The VAT Flat Rate Scheme (FRS) simplifies VAT for businesses with turnover under £150,000 (excl. VAT). Instead of calculating VAT on every individual transaction, you pay a fixed percentage of your gross (VAT-inclusive) turnover to HMRC. The percentage varies by trade sector: 14.5% for consultants, 12% for computer and IT consultants, 9% for hairdressers, 4% for retailers of food. The saving comes from the difference between the 20% you charge customers and the flat rate you pay HMRC. A consultant billing £120,000 (inc. 20% VAT) pays 14.5% × £120,000 = £17,400 to HMRC, but collected £20,000 in VAT — keeping £2,600. However, the FRS "limited cost trader" rate of 16.5% applies if goods purchased are under 2% of turnover, which catches many service businesses.
