🧾 VAT Calculator

Use this free VAT calculator to add or remove Value Added Tax on any amount. Select the applicable UK VAT rate—Standard 20%, Reduced 5%, or Zero-rated 0%—and get an instant breakdown of the net price, VAT amount, and gross total. Whether you’re a sole trader pricing your services, a small-business owner preparing invoices, or a consumer checking a receipt, this tool makes VAT arithmetic effortless.

The calculator handles both directions: enter a net figure to add VAT, or enter a gross figure to remove VAT and see the pre-tax amount. All results are shown in pounds sterling (£) and rounded to two decimal places, matching HMRC’s rounding conventions. Bookmark this page for quick access whenever you need to work out VAT on the go.

What Is VAT?

Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in the United Kingdom. It is collected at each stage of the supply chain, but the cost is ultimately borne by the final 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 each quarter.

VAT was introduced in the UK on 01/04/1973, replacing the earlier Purchase Tax. Today it raises more than £160 billion per year for the Exchequer, making it the third-largest source of government revenue after income tax and National Insurance contributions.

UK VAT Rates

HMRC applies three main VAT rates:

Standard rate – 20%: The default rate for the majority of goods and services, including electronics, clothing for adults, restaurant meals, professional services, and most retail items.
Reduced rate – 5%: Applies to a limited range of supplies, such as domestic gas and electricity, children’s car seats, smoking-cessation products, and certain energy-saving materials installed in residential properties.
Zero rate – 0%: Charged on most food and drink (excluding meals served in restaurants, hot takeaways, and some confectionery), children’s clothing and footwear, books, newspapers, and public transport fares. Zero-rated goods are still taxable supplies—the rate simply happens to be 0%.

Some supplies are VAT-exempt rather than zero-rated. Examples include financial services, insurance, education, and health services provided by registered practitioners. The key distinction is that businesses making exempt supplies cannot reclaim the input VAT they pay on related purchases, whereas businesses making zero-rated supplies can. This difference has a real impact on cash flow and pricing.

How to Calculate VAT

The arithmetic is straightforward once you know the rate:

Adding VAT: Gross = Net + (Net × Rate ÷ 100). At the standard 20% rate this simplifies to Gross = Net × 1.20. For example, a net price of £250.00 becomes £250.00 × 1.20 = £300.00 inclusive of £50.00 VAT.

Removing VAT: Net = Gross ÷ (1 + Rate ÷ 100). At 20% this is Net = Gross ÷ 1.20. For example, a VAT-inclusive price of £360.00 gives £360.00 ÷ 1.20 = £300.00 net, with £60.00 being the VAT portion.

At the reduced 5% rate the multiplier is 1.05. A net cost of £80.00 becomes £80.00 × 1.05 = £84.00. To reverse, divide the gross by 1.05.

VAT Registration and Compliance

You must register for VAT with HMRC if your taxable turnover exceeds £90,000 in any rolling 12-month period (the current threshold as of 2024). Voluntary registration is permitted below this threshold and can be advantageous if you sell mainly zero-rated goods, because it allows you to reclaim input VAT while charging 0% on sales.

Making Tax Digital (MTD) requires all VAT-registered businesses to keep digital records and submit VAT returns through MTD-compatible software. Paper returns and manual spreadsheets are no longer accepted. Returns are due quarterly, and payment must reach HMRC by the same deadline—typically one calendar month and seven days after the end of the VAT quarter.

The Flat Rate Scheme is available to businesses with taxable turnover of £150,000 or less. Instead of tracking input and output VAT on every transaction, you pay a fixed percentage of your gross turnover to HMRC. The percentage varies by trade sector—for example, 14.5% for computer and IT consultancy or 12% for retailing food and confectionery. This simplifies record-keeping considerably, though it does not always produce the lowest tax bill.

In the construction industry, the domestic reverse charge mechanism shifts the obligation to account for VAT from the supplier to the customer. If you are a VAT-registered contractor receiving construction services, you must account for the VAT on your own return rather than paying it to your supplier. This measure was introduced to combat missing-trader fraud in the building sector.

Since the UK left the EU single market, import VAT is due on goods arriving from any country, including EU member states. Import VAT is normally charged at the same rate that would apply to a domestic sale. Most VAT-registered businesses use postponed VAT accounting, which lets them declare and reclaim import VAT on the same return without making an upfront cash payment at the border.

Tips for Managing VAT

Keep digital records from day one. Even if you are below the registration threshold, MTD-compatible bookkeeping software makes the transition seamless when your turnover grows. Many cloud packages cost less than £15 per month.
Review the Flat Rate Scheme annually. Your business mix may change, and the scheme that saved you money last year could cost you more this year. Compare your actual input VAT against the flat rate to check.
Claim input VAT promptly. You can reclaim VAT on purchases made up to four years before your current return. Check old invoices for expenses you may have overlooked, particularly on capital equipment.
Watch the partial-exemption threshold. If you make both taxable and exempt supplies, you may need to apportion input VAT. HMRC allows you to treat all input VAT as recoverable if the exempt portion is below £625 per month on average.
Use the Percentage Calculator for quick margin and mark-up conversions alongside your VAT workings.

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Frequently Asked Questions

How do I add VAT at 20% to a price?

Multiply the net amount by 1.20. For example, £500.00 × 1.20 = £600.00 inclusive of VAT. The VAT portion is £100.00. This calculator performs the conversion instantly—just enter the net figure and select the 20% rate.

How do I remove VAT from a gross price?

Divide the VAT-inclusive amount by 1.20 (for the standard rate). For example, £600.00 ÷ 1.20 = £500.00 net. The VAT content is £100.00. A common mistake is to subtract 20% of the gross, which gives the wrong answer.

What is the current VAT registration threshold?

You must register for VAT if your taxable turnover exceeds £90,000 in any rolling 12-month period. You may also register voluntarily below this threshold, which can be beneficial if you sell zero-rated goods and want to reclaim input VAT.

What is the difference between zero-rated and VAT-exempt?

Zero-rated goods carry VAT at 0%, but they are still classed as taxable supplies, so the business can reclaim input VAT on related costs. Exempt supplies are outside the VAT system entirely, meaning the business cannot recover the input VAT it pays on expenses linked to those supplies.

What are the Making Tax Digital requirements?

All VAT-registered businesses must keep digital records and file VAT returns through MTD-compatible software. Paper-based submissions are no longer accepted. Returns are due quarterly, and payment must reach HMRC by one calendar month and seven days after the quarter ends.

Who can use the Flat Rate VAT Scheme?

The scheme is open to businesses with taxable turnover of £150,000 or less (excluding VAT). You pay a fixed percentage of your gross turnover to HMRC instead of tracking input and output VAT on every transaction. The percentage depends on your trade sector and typically ranges from 4% to 16.5%.