How to Use the UK VAT Calculator
Our free UK VAT calculator is one of the simplest and most accurate ways to work out VAT on any amount. Whether you're a sole trader adding VAT to a client invoice, a bookkeeper reconciling accounts, or simply a consumer trying to understand the true cost of a purchase, this tool gives you instant results.
To add VAT to a net price: enter the amount, select your VAT rate (20%, 5% or 0%), then click "Add VAT". The tool shows you the VAT amount and the full gross price immediately. To remove VAT from a gross price: enter the VAT-inclusive total, select the rate, and click "Remove VAT" — you'll see the net price and the exact VAT that was charged.
💡 Quick calculation tip: For 20% VAT, remember the multipliers — ×1.20 to add VAT, ÷1.20 to remove it. For 5% VAT: ×1.05 to add, ÷1.05 to remove.
UK VAT Rates Explained (2026)
HM Revenue & Customs (HMRC) currently operates three main VAT rates in the United Kingdom. Understanding which rate applies to your goods or services is essential for correct invoicing and compliance.
| Rate | Percentage | Common Examples |
|---|
| Standard Rate | 20% | Most goods and services, electronics, clothing (adult), takeaway food, vehicle repairs, professional services |
| Reduced Rate | 5% | Domestic fuel and power, children's car seats, mobility aids for the elderly, some energy-saving materials, nicotine patches |
| Zero Rate | 0% | Most food and drink (for human consumption), children's clothes and shoes, books, newspapers, magazines, passenger transport, prescription medicines |
| Exempt | N/A | Insurance, financial services, education, health services, residential property letting, postal services |
⚠️ Important: Zero-rated and VAT-exempt are NOT the same thing. Zero-rated businesses can still reclaim input VAT on their costs. Exempt businesses cannot. If your business makes exempt supplies, always take advice from a qualified accountant or HMRC.
Standard Rate — 20% VAT
The 20% standard rate applies to the majority of goods and services sold in the UK. This rate has been in place since January 2011 when it was increased from 17.5%. Key categories that attract standard rate VAT include:
- Electronics, appliances and technology products
- Adult clothing, shoes and accessories
- Vehicles and vehicle repairs
- Professional services (legal, marketing, consulting)
- Hospitality — restaurants, hotels, cafés
- Alcohol and tobacco products
- Online subscriptions and digital services
- Construction services (unless zero-rated new builds)
Reduced Rate — 5% VAT
The 5% reduced rate applies to a specific list of goods and services where parliament has decided a lower rate is appropriate, usually for social or environmental reasons. The most significant categories are:
- Domestic fuel and power — electricity, gas, heating oil for the home
- Children's car seats, booster seats and baby seats
- Mobility aids for elderly people (e.g. walking frames, bath lifts)
- Smoking cessation products (nicotine patches, gum)
- Renovation and conversion of residential properties (in some cases)
- Solar panels and other energy-saving materials (domestic installations)
- Women's sanitary products (from 1 January 2021)
Zero Rate — 0% VAT
Zero-rated supplies are technically VAT-taxable but at a 0% rate — meaning no VAT is charged to the customer, but the business can still reclaim VAT paid on its inputs. The most important zero-rated categories include:
- Food — most basic food for human consumption (not catering or hot food)
- Children's clothing — clothes and shoes designed for under-14s
- Books and publications — physical books, newspapers and magazines
- Passenger transport — bus fares, train tickets, air travel
- Prescription medicines and drugs
- New residential buildings (first sale by developer)
- Exports outside the UK
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VAT Registration in the UK — Who Must Register?
If your business's taxable turnover exceeds the VAT registration threshold, you are legally required to register for VAT with HMRC. Understanding these thresholds is critical to staying compliant.
| Threshold | Amount | Action Required |
|---|
| Mandatory registration threshold | £90,000 (2024/25) | Register within 30 days of exceeding the threshold |
| Voluntary registration | Below £90,000 | Can register voluntarily — often beneficial for B2B businesses |
| De-registration threshold | £88,000 | Can deregister if taxable turnover falls below this level |
The threshold is measured on a rolling 12-month basis — it is not based on a tax year. If your turnover in any 12-month period exceeds £90,000, you have 30 days to notify HMRC and register. Once registered, you will receive a VAT registration number (in the format GB followed by 9 digits) which must appear on all VAT invoices.
Benefits of Voluntary VAT Registration
Even if you're below the threshold, voluntary registration can be worthwhile if:
- Your main customers are VAT-registered businesses (they can reclaim the VAT you charge)
- You make significant purchases on which you want to reclaim input VAT
- You want to appear more established to larger corporate clients
- You export goods outside the UK (zero-rated exports)
💼 Sole trader tip: If you're a freelancer or consultant whose clients are all VAT-registered businesses, voluntary registration rarely affects your pricing — they reclaim the VAT anyway. But you can reclaim VAT on your laptop, phone, software subscriptions and other business costs.
How VAT Works — Input Tax vs Output Tax
VAT operates as a tax on the consumer, collected at each stage of the supply chain. Understanding the difference between input and output VAT is essential for any VAT-registered business:
- Output VAT — the VAT you charge on your sales. You collect this on behalf of HMRC.
- Input VAT — the VAT you pay on your purchases and business costs. You can reclaim this from HMRC.
- VAT liability — the difference between output VAT and input VAT. If output exceeds input, you pay HMRC. If input exceeds output (common in the first year), HMRC refunds you.
Example: You buy materials for £2,400 including £400 VAT (input tax). You sell the finished product for £4,800 including £800 VAT (output tax). Your VAT return shows: £800 output tax − £400 input tax = £400 due to HMRC.
Making Tax Digital (MTD) for VAT
Since April 2022, all VAT-registered businesses with turnover above the VAT threshold have been required to use Making Tax Digital (MTD) compliant software to keep digital VAT records and submit VAT returns. From April 2022, this requirement extended to all VAT-registered businesses regardless of turnover.
MTD for VAT means:
- You must keep digital records of your VAT transactions
- VAT returns must be submitted digitally using HMRC-recognised software
- Paper VAT returns are no longer accepted
- Popular compliant software includes Xero, QuickBooks, Sage and FreeAgent
VAT on Different Types of Transactions
VAT on Food and Drink
Food VAT rules are among the most complex in the UK tax system. The general principle is that food for human consumption is zero-rated, but there are many exceptions that attract the full 20% standard rate:
- Zero-rated: Bread, cereals, meat, fish, fresh fruit and vegetables, dairy products, tea, coffee, juices (cold)
- Standard-rated (20%): Crisps, popcorn, ice cream, chocolate confectionery, alcoholic beverages, hot takeaway food, catering (restaurants, cafés, hotels)
- Hot food rule: Food that is hot at the point of sale is standard-rated — this is why a supermarket rotisserie chicken is standard-rated but a cold cooked chicken is zero-rated
VAT on Property and Construction
Property transactions have complex VAT treatment in the UK. Key rules:
- New residential buildings: Zero-rated (builder can reclaim all input VAT)
- Residential conversions: 5% reduced rate
- Renovation of empty properties: May qualify for 5% reduced rate
- Commercial property: Generally exempt, but can be opted into VAT
- Residential letting: Exempt from VAT
VAT on Digital Services
Since 2015, businesses selling digital services (software, streaming, apps, e-books) to UK consumers must charge UK VAT regardless of where the seller is based. This applies to businesses selling into the UK from anywhere in the world if their UK consumer sales exceed £8,818 per year.
Frequently Asked Questions
What is the UK VAT rate in 2026? +
The standard UK VAT rate is 20% in 2026. This rate has been unchanged since January 2011. The reduced rate is 5% and applies to specific goods like domestic fuel and children's car seats. Most basic food, books and children's clothes are zero-rated (0%). There is no indication the government plans to change these rates in the near future.
How do I add 20% VAT to a price? +
To add 20% VAT: multiply the net price by 1.20. Example: £500 net price × 1.20 = £600 gross (VAT-inclusive) price. The VAT amount is £100. Alternatively, take 20% of the net price and add it on: 20% of £500 = £100, so gross = £600. Our calculator above does this automatically for any amount and rate.
How do I remove VAT from a gross price? +
To remove 20% VAT from a gross (VAT-inclusive) price, divide by 1.20. Example: £600 ÷ 1.20 = £500 net. The VAT is £100. Do NOT simply calculate 20% of the gross price — this is a common mistake. 20% of £600 = £120, which is wrong. Always divide the gross by 1.20 (or 1.05 for 5% VAT) to find the net price.
What is the VAT registration threshold in the UK (2026)? +
The VAT registration threshold for 2024/25 is £90,000. You must register for VAT with HMRC within 30 days of the end of the month in which your taxable turnover exceeded this amount in any 12-month rolling period. The de-registration threshold is £88,000. The government has frozen this threshold until at least 2026, meaning more businesses are being pulled into the VAT system due to inflation.
Is VAT charged on food in the UK? +
Most basic food is zero-rated (0% VAT) in the UK. However, hot takeaway food, alcoholic drinks, crisps, popcorn, confectionery and ice cream are all subject to 20% standard rate VAT. Restaurant meals and catering are also standard-rated, as is any food purchased from a vending machine. Cold takeaway food (like a supermarket sandwich) is generally zero-rated.
How often do I submit a VAT return? +
Most UK businesses submit quarterly VAT returns — four times a year. The return and payment are due one month and seven days after the end of the VAT period. Some businesses can apply for monthly VAT returns (which helps cash flow if you regularly receive VAT refunds) or annual returns (for very small businesses). All returns must now be submitted digitally under Making Tax Digital for VAT.
Can I reclaim VAT on a company car? +
You generally cannot reclaim VAT on the purchase of a company car unless it is used exclusively for business purposes — which is very difficult to demonstrate when the car is available for private use. However, you can reclaim 50% of the VAT on a car lease if there is some private use, and 100% if the car is used exclusively for business. VAT on fuel can be reclaimed, subject to the fuel scale charge.
What is a VAT invoice? +
A VAT invoice is a document that a VAT-registered business must issue when making a standard-rated or reduced-rated supply to a VAT-registered customer. It must include: your VAT registration number, the date of supply, a description of goods or services, the net amount, the VAT rate, the VAT amount, and the gross total. Simplified VAT invoices (for supplies under £250) require less detail but must still show the VAT registration number.