UK VAT Calculator — Add or Remove VAT Instantly
How UK VAT Works
VAT (Value Added Tax) is a consumption tax added to most goods and services sold in the UK. Businesses above the registration threshold collect it on behalf of HMRC and pay it over on their VAT returns.
There are three rates. Standard rate (20%) applies to most things — electronics, clothing for adults, restaurant meals, professional services. Reduced rate (5%) covers items like domestic energy bills and children's car seats. Zero rate (0%) applies to most food, children's clothing, and books — technically taxable but at 0%, which matters because sellers can still reclaim input VAT.
You must register for VAT once your taxable turnover exceeds £90,000 in any rolling 12-month period. Some items are exempt from VAT entirely (insurance, most financial services, education, health) — exempt is different from zero-rated: exempt sellers cannot reclaim VAT on their purchases.
How to Calculate VAT
To add standard rate VAT to a net price of £500: £500 × 0.20 = £100 VAT, giving a gross price of £600. To remove VAT from £600: £600 ÷ 1.20 = £500 net, so the VAT portion is £100. For the reduced rate, divide by 1.05 instead of 1.20.
Frequently Asked Questions
What is the current UK VAT rate?
The standard rate is 20%, applying to most goods and services. A reduced rate of 5% applies to certain items like home energy and children's car seats. Some goods like most food and children's clothing are zero-rated.
How do I reverse-calculate VAT?
To find the net amount from a VAT-inclusive price, divide by 1.20 (for standard rate) or 1.05 (for reduced rate). For example, an item priced at £120 including standard VAT has a net value of £100 and a VAT amount of £20.
When do I need to register for VAT?
You must register when your taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect to exceed it within 30 days. You can register voluntarily below this threshold.
Can I reclaim VAT on purchases?
If you're VAT-registered, you can reclaim VAT on goods and services purchased for business use. This is called input tax. You report it on your VAT return, offsetting it against the VAT you've charged customers.
What's the difference between zero-rated and VAT exempt?
Zero-rated goods are technically taxable but at 0%, meaning the seller can still reclaim input VAT. Exempt goods are outside the VAT system entirely, so the seller cannot reclaim input VAT on related costs.