UK VAT Rate Calculator
£
Standard Rate (20%)
Reduced Rate (5%)
Zero Rate (0%)
Net Amount (Excl. VAT):
£0.00
VAT Amount:
£0.00
Gross Amount (Incl. VAT):
£0.00
Understanding UK VAT Rates and Calculations
Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in the United Kingdom. Whether you are a business owner registering for VAT returns or a consumer checking a receipt, understanding how to calculate VAT correctly is essential.
Current UK VAT Rates
There are three primary VAT rates currently enforced by HMRC (HM Revenue and Customs):
- Standard Rate (20%): Applies to most goods and services, including electronics, clothing, legal services, and hot food.
- Reduced Rate (5%): Applies to specific items such as children's car seats, home energy, and certain social housing renovations.
- Zero Rate (0%): Applies to life necessities like most food (not hot or catered), children's clothes, books, and newspapers. Note that 0% is different from being "exempt" from VAT.
How to Calculate VAT
The mathematical approach changes depending on whether you are starting with a Net figure (excluding VAT) or a Gross figure (including VAT).
Adding VAT (Net to Gross)
If you have a price without VAT and need to add the standard 20% rate:
VAT Amount = Net Price × 0.20
Gross Price = Net Price × 1.20
Gross Price = Net Price × 1.20
Example: If a service costs £100 (Net), the VAT is £20 (£100 × 0.20), making the total invoice £120.
Removing VAT (Gross to Net)
This is often the trickiest calculation. To find the VAT portion of a total receipt price, you cannot simply subtract 20%. You must divide by 1.20.
Net Price = Gross Price ÷ 1.20
VAT Amount = Gross Price – Net Price
VAT Amount = Gross Price – Net Price
Alternatively, the "VAT Fraction" for 20% is 1/6. You can calculate the VAT content of a gross price by dividing the total by 6.
Example: If you buy a laptop for £120 (Gross), the Net price is £100 (£120 ÷ 1.20), and the VAT paid is £20.
VAT Registration Threshold
Businesses in the UK must register for VAT if their VAT-taxable turnover exceeds £90,000 (effective from 1 April 2024). Once registered, you must charge VAT on your products or services and reclaim VAT paid on business expenses.