VAT calculator

UK VAT (Value Added Tax) is charged at three rates: the standard rate of 20%, the reduced rate of 5% for certain items like domestic fuel and children’s car seats, and the zero rate of 0% for most food, children’s clothing, books and newspapers. There are also exempt categories (financial services, education, healthcare) where VAT doesn’t apply at all. This calculator adds VAT to a net price or removes it from a gross price, working at any of the three rates, and shows the breakdown clearly. It also handles the maths for businesses preparing VAT invoices, partial-recovery situations and reverse-charge VAT.

How to add VAT

To add 20% VAT to a net price, multiply by 1.20.

• £100 net + 20% VAT = £100 Ã, 1.20 = £120 gross
• £75 net + 20% VAT = £75 Ã, 1.20 = £90 gross
• £4,500 net + 20% VAT = £4,500 Ã, 1.20 = £5,400 gross

For 5% VAT, multiply by 1.05. £100 net + 5% VAT = £105.

The VAT element on its own is the gross minus the net: £120 − £100 = £20. Or equivalently, £100 Ã, 0.20 = £20.

How to remove VAT

To remove 20% VAT from a gross price (a price that already includes VAT), divide by 1.20.

• £120 gross / 1.20 = £100 net
• £600 gross / 1.20 = £500 net
• £1,500 gross / 1.20 = £1,250 net

The VAT element is the gross minus the net: £120 − £100 = £20. Or equivalently, £120 Ã, (1 − 1/1.20) = £120 Ã, 0.1667 = £20.

The most common mistake is to subtract 20% from the gross price. £120 − 20% = £96, which is wrong. The reason: 20% of £120 is £24, so subtracting 20% of the gross over-removes the VAT. The VAT was 20% of £100 (the net), not 20% of £120 (the gross). Always divide by 1.20 to remove VAT.

For 5% VAT, divide by 1.05. £105 gross / 1.05 = £100 net.

VAT rates and what they apply to

The difference between zero-rated and exempt matters for businesses. Zero-rated supplies still count as taxable supplies for VAT registration thresholds and let the business reclaim VAT on related expenses. Exempt supplies don’t, which is why an exempt business (like a charity providing only education) can’t reclaim VAT on its overheads.

VAT registration

A business must register for VAT when its taxable turnover exceeds £90,000 in any rolling 12-month period (the threshold for 2026/27, frozen at £90,000 since April 2024). The business must also register if it expects turnover to exceed the threshold in the next 30 days alone (the “look ahead” test).

You can also register voluntarily below the threshold. This makes sense for B2B businesses where customers can reclaim VAT (the VAT becomes invisible to them), but rarely makes sense for B2C businesses where VAT becomes an effective price increase.

Once registered, the business must:

• Charge VAT on all taxable supplies at the appropriate rate
• File a VAT return (usually quarterly, sometimes monthly or annually)
• Pay net VAT (output tax minus input tax) to HMRC
• Use Making Tax Digital-compatible software for VAT records and filing

How to charge VAT on invoices

A VAT invoice must include:

• A unique invoice number
• The supplier’s name, address and VAT registration number
• The customer’s name and address
• The date of supply (tax point) and invoice date
• A description of goods or services
• The unit price (excluding VAT)
• The VAT rate and amount
• The total excluding VAT, the VAT amount and the total including VAT

For supplies over £100 + VAT, a full VAT invoice is required. Below £100 + VAT a “less detailed” invoice is acceptable. Retailers often issue till receipts that meet the less-detailed format.

Reverse charge VAT

The reverse charge moves the VAT accounting from the supplier to the customer. The supplier issues an invoice without VAT and the customer accounts for the VAT on their own VAT return (both as output tax and, if eligible, as input tax — usually netting to zero).

Reverse charge applies to:

• Domestic reverse charge for construction services since March 2021: most B2B construction services subject to CIS.
• Cross-border B2B services between the UK and other countries.
• Mobile phones and computer chips above £5,000 (anti-MTIC fraud measure).

For the construction industry the reverse charge has been a significant operational change — main contractors absorb the VAT cost upfront where they would previously have been paid VAT by their subbie and passed it on to HMRC.

Key takeaways

• 20% VAT is added by multiplying by 1.20 and removed by dividing by 1.20 (not by subtracting 20% from the gross).
• Three rates: 20% standard, 5% reduced (limited categories), 0% zero (food, books, children’s clothes), plus exempt categories.
• VAT registration is mandatory above £90,000 turnover in any rolling 12-month period.
• Voluntary VAT registration suits B2B businesses below threshold; rarely useful for B2C.
• Domestic reverse charge applies to most B2B construction services since March 2021.

Frequently asked questions

Why can’t I just subtract 20% from the gross to remove VAT? Because 20% VAT is calculated on the net, not the gross. £100 net + 20% = £120 gross. Subtracting 20% from £120 gives £96, which would imply a net of £96 and VAT of £24 — but 20% of £96 is £19.20, not £24. The maths only works by dividing by 1.20.

Do I charge VAT on my exports? Goods exported outside the UK are generally zero-rated. Services exported to a non-UK business customer are usually outside the scope of UK VAT entirely (the place of supply rules apply). Check the specific rules — international VAT is one of the more complicated areas.

Can I reclaim VAT on entertaining? No. Business entertaining (taking clients to restaurants, sporting events, etc.) is specifically blocked from VAT recovery. Staff entertaining is recoverable, with some restrictions on lavishness and extent.

What’s the threshold for registering for VAT? £90,000 of taxable turnover in a rolling 12-month period for 2026/27. The threshold has been frozen at £90,000 since 1 April 2024. Voluntary registration is available below this; mandatory above. The deregistration threshold is £88,000 — you can deregister if your turnover is expected to be below £88,000 for the next 12 months.