VAT Calculator UK
Quickly add VAT to a net amount or remove VAT from a gross amount. Choose between the standard 20% rate and the reduced 5% rate, then enter your figure to see an instant breakdown of the net price, VAT amount, and total.
Price Including VAT
£120.00
VAT of £20.00 at 20.0%
Net Amount
£100.00
VAT
£20.00
Gross Amount
£120.00
| Breakdown | Amount |
|---|---|
| Net Amount (excl. VAT) | £100.00 |
| VAT at 20.0% | £20.00 |
| Gross Amount (incl. VAT) | £120.00 |
How VAT Works in the UK
Value Added Tax is a consumption tax charged on most goods and services sold in the UK. It is collected at each stage of the supply chain, but the cost is ultimately borne by the end consumer. Businesses registered for VAT act as collection agents: they charge VAT on their sales (output tax) and reclaim VAT on their purchases (input tax), paying the difference to HMRC.
The UK has three main VAT rates. The standard rate of 20% applies to the vast majority of goods and services. The reduced rate of 5% covers specific categories including domestic gas and electricity, children's car seats, and certain energy-saving materials. The zero rate of 0% applies to essentials such as most food, children's clothing, books, and public transport. Some services — notably financial services, insurance, and education — are exempt from VAT altogether.
When you see a price in a UK shop, it almost always includes VAT already. Business-to-business invoices, on the other hand, typically show the net amount and VAT separately. Understanding the difference is essential when comparing quotes or working out your true costs.
VAT Registration Threshold
If your business has taxable turnover exceeding £90,000 in any rolling 12-month period, you are legally required to register for VAT with HMRC. You must also register if you expect your turnover to exceed £90,000 in the next 30 days alone.
Once registered, you must charge VAT on all applicable sales, submit quarterly VAT returns (usually through Making Tax Digital compatible software), and pay the VAT you owe. The benefit of registration is that you can reclaim VAT on business expenses, which can significantly reduce costs if you purchase goods or services from other VAT-registered businesses.
Voluntary registration is possible even if your turnover is below the threshold. This can be advantageous if most of your customers are VAT-registered businesses, as they can reclaim the VAT you charge. However, if you sell mainly to consumers, adding 20% to your prices could make you less competitive.
Example VAT Calculations
The following examples show how VAT works in practice at the standard 20% rate.
Adding VAT to a £500 invoice
A freelancer quotes £500 for a project (net of VAT). At the standard 20% rate, VAT of £100 is added, making the gross invoice £600. The client pays £600, and the freelancer remits the £100 VAT to HMRC.
Removing VAT from a £1,200 receipt
A business buys equipment for £1,200 including VAT. Dividing by 1.20 gives a net price of £1,000 and VAT of £200. The business can reclaim the £200 as input tax on its next VAT return, so the true cost is £1,000.
Reduced rate: domestic energy bill of £84
Domestic gas and electricity are charged at the reduced 5% rate. A bill of £84 including VAT has a net amount of £80 and £4 in VAT. Consumers cannot reclaim this VAT, but the reduced rate keeps energy costs lower than if the standard rate applied.
Frequently Asked Questions
What is the current UK VAT rate?
The standard rate of VAT in the UK is 20% and applies to most goods and services. A reduced rate of 5% applies to certain items such as domestic energy, children’s car seats, and some energy-saving installations. A zero rate of 0% applies to essentials like most food, children’s clothing, books, and newspapers. Some services, such as financial and insurance services, are exempt from VAT entirely.
How do I add VAT to a price?
To add the standard 20% VAT to a net price, multiply the amount by 1.20. For example, an item priced at £100 excluding VAT becomes £120 including VAT. For the reduced 5% rate, multiply by 1.05 instead. This calculator does both automatically.
How do I remove VAT from a price?
To remove VAT from a gross price that already includes the standard 20% rate, divide the amount by 1.20. For example, an item priced at £120 including VAT has a net price of £100 and £20 in VAT. For the 5% rate, divide by 1.05. A common mistake is simply subtracting 20%, which gives the wrong answer.
What is the VAT registration threshold in the UK?
As of April 2024, you must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period. You can also register voluntarily if your turnover is below this threshold, which allows you to reclaim VAT on business purchases. Once registered, you must charge VAT on your sales and submit VAT returns to HMRC, usually every quarter.
Do I need to charge VAT on exports?
Goods exported outside the UK are generally zero-rated for VAT purposes, meaning you do not charge VAT to the overseas customer. However, you must keep evidence of the export. Services supplied to businesses outside the UK may also be outside the scope of UK VAT, depending on the type of service and the location of the customer. The rules can be complex, so it is worth checking HMRC’s guidance or consulting an accountant.
What is a VAT-inclusive vs VAT-exclusive price?
A VAT-inclusive (gross) price is the total amount the buyer pays, with VAT already included. A VAT-exclusive (net) price is the amount before VAT has been added. Businesses typically quote net prices to other businesses, while consumer-facing prices in the UK are almost always shown inclusive of VAT. This calculator lets you work in either direction.
Important Disclaimer
The figures provided by this calculator are estimates based on the information you enter and published rates at the time of writing. They do not constitute financial, tax, or legal advice, and we accept no liability for decisions made on the basis of these estimates. Your actual liability may differ depending on your individual circumstances, applicable reliefs, and any changes to rates or legislation. Always consult a qualified professional or check the latest HMRC guidance at gov.uk before making financial decisions.
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