% VAT Calculator
Result
How to Calculate VAT
Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in the UK. The standard rate is 20% and has been at this level since January 2011. Understanding how to add and remove VAT is essential for businesses, freelancers, and anyone checking invoices or receipts.
Adding VAT (Net to Gross)
To add VAT to a net amount, multiply by (1 + VAT rate):
- 20% VAT: Net amount × 1.20 = Gross amount
- 5% VAT: Net amount × 1.05 = Gross amount
- Example: £500 + 20% VAT = £500 × 1.20 = £600 (VAT = £100)
Removing VAT (Gross to Net)
To remove VAT from a gross amount, divide by (1 + VAT rate):
- 20% VAT: Gross amount ÷ 1.20 = Net amount
- 5% VAT: Gross amount ÷ 1.05 = Net amount
- Example: £600 including VAT = £600 ÷ 1.20 = £500 net (VAT = £100)
UK VAT Rates
| Rate | Percentage | Applies To |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Home energy, children's car seats, sanitary products, home renovations (some), smoking cessation products |
| Zero | 0% | Most food, children's clothing, books, newspapers, public transport |
| Exempt | N/A | Insurance, financial services, education, health services, postage stamps, burial and cremation |
VAT Registration Threshold
You must register for VAT with HMRC if your taxable turnover exceeds £90,000 in any rolling 12-month period (or if you expect it to exceed £90,000 in the next 30 days). This threshold was increased from £85,000 to £90,000 from 1 April 2024.
You can also register voluntarily if your turnover is below the threshold. This can be beneficial if you sell mainly to VAT-registered businesses (who can reclaim the VAT) because it lets you reclaim VAT on your own business purchases.
The VAT Flat Rate Scheme
Small businesses with taxable turnover of £150,000 or less can join the Flat Rate Scheme. Instead of tracking VAT on every invoice and purchase, you pay HMRC a fixed percentage of your gross turnover. The percentage depends on your trade sector:
- Computer and IT consultancy: 14.5%
- Management consultancy: 14%
- Hairdressing: 13%
- Food retailing: 4%
- Hotels and accommodation: 10.5%
- Building and construction (labour only): 14.5%
Key VAT Deadlines
- VAT returns: Usually submitted quarterly. Due 1 month and 7 days after the end of each VAT period.
- Payment: Same deadline as the return. Set up a direct debit for an extra 3 working days.
- Making Tax Digital (MTD): All VAT-registered businesses must use compatible software to keep digital records and submit VAT returns.
VAT on Common Items
Zero-Rated (0% VAT)
- Most food (but not restaurant meals, hot takeaway food, or confectionery)
- Children's clothing and shoes (up to age 14)
- Books, newspapers, and magazines
- Public transport
- Prescription medicines
- New-build residential property
Reduced Rate (5% VAT)
- Domestic fuel and power (gas, electricity)
- Installation of energy-saving materials
- Children's car seats
- Sanitary products
- Mobility aids for the elderly
Standard Rate (20% VAT)
- Most goods and services not listed above
- Restaurant meals and hot takeaways
- Alcohol and tobacco
- Electrical goods, furniture, clothing (adult)
- Professional services (legal, accounting, consulting)
Frequently Asked Questions
Multiply the net amount by 1.20 for 20% VAT. For example, £100 × 1.20 = £120.
Divide the gross amount by 1.20 for 20% VAT. For example, £120 ÷ 1.20 = £100 net.
£90,000 for 2025/26. You must register if your taxable turnover exceeds this in any rolling 12-month period.
A simplified VAT scheme for small businesses (turnover up to £150k). You pay a fixed percentage of gross turnover instead of tracking VAT on every transaction.