How do I add 20% VAT to a price?

Multiply the net price by 1.20. £100 net becomes £120 including VAT, of which £20 is VAT. At the 5% reduced rate, multiply by 1.05 — £100 becomes £105, of which £5 is VAT.

How do I remove VAT from a price?

Divide the VAT-inclusive price by 1.20 for the standard rate. £120 including VAT is £100 net plus £20 VAT. Do not just knock 20% off — 20% of £120 is £24, which is wrong. The VAT in a 20% price is one-sixth of the gross price.

What is the UK VAT registration threshold?

£90,000 of VAT-taxable turnover in any rolling 12-month period. The threshold has been £90,000 since 1 April 2024. The deregistration threshold is £88,000. You must register within 30 days of the end of the month in which you cross it.

What is the reduced VAT rate of 5% for?

Domestic fuel and power, energy-saving materials, children's car seats, mobility aids for older people and some building conversions. The zero rate of 0% covers most food, children's clothing, books and newspapers, and exported goods.

What is the difference between zero-rated and exempt?

Zero-rated supplies carry 0% VAT but still count as taxable supplies — the business can reclaim VAT on its costs and the sales count towards the £90,000 threshold. Exempt supplies (insurance, finance, education) are outside the VAT system: no VAT is charged, VAT on costs cannot be reclaimed, and the sales do not count towards the threshold.

Is VAT charged on everything?

No. Most goods and services carry 20%, but some carry 5% or 0%, and some (insurance, finance, education) are exempt. Always check GOV.UK's VAT rates list for the item you are selling — the rate depends on what it is, not on the price.

VAT Calculator UK

TL;DR: The UK standard rate of VAT is 20% on most goods and services. A reduced rate of 5% applies to things like domestic energy and children’s car seats, and a zero rate of 0% applies to most food, children’s clothing and books. To add VAT, multiply by 1.20 — £100 becomes £120. To strip VAT out of a price, divide by 1.20 — £120 inc. VAT is £100 net plus £20 VAT. Businesses must register for VAT once taxable turnover passes £90,000 in any rolling 12 months.

Amount (£) VAT rate What is the amount?

The calculator takes the rate as an input because the rate depends on what is being sold, not on the price. Check GOV.UK’s VAT rates list before you charge a customer — getting the rate wrong is the most common VAT mistake. Figures are estimates, not tax advice.

The three UK VAT rates

Rate	Applies to	Examples
20% standard	Most goods and services	Electronics, adult clothing, restaurant meals, professional services, pay TV
5% reduced	Specific items set out in law	Domestic fuel and power, energy-saving materials, children’s car seats, mobility aids for older people, some building conversions
0% zero-rated	Specific items, still counted as taxable supplies	Most food, children’s clothing, books and newspapers, exported goods

The standard rate has been 20% since 4 January 2011 and has not moved since. There is also a fourth category, exempt supplies — insurance, finance, education and some health services — which are outside the VAT system entirely. The difference matters: a zero-rated business can still reclaim the VAT it pays on its own costs, but an exempt business cannot. Zero-rated sales also count towards the £90,000 registration threshold; exempt sales do not.

Adding and removing VAT

Adding VAT is simple: multiply the net price by 1.20 for the standard rate, or by 1.05 for the reduced rate. A £100 net item at 20% costs the customer £120, of which £20 is VAT. At 5% it costs £105, of which £5 is VAT.

Removing VAT is where people go wrong. You cannot just knock 20% off the VAT-inclusive price — that gives the wrong answer, because 20% of £120 is £24, not £20. The VAT-inclusive price is 120% of the net price, so you divide by 1.20. A £120 price inc. VAT is £100 net plus £20 VAT. A £240 price inc. VAT is £200 net plus £40 VAT. The VAT fraction of a 20% price is 1/6 — divide the gross price by 6 and that is the VAT. For a 5% price, divide the gross by 21.

Price inc. VAT (20%)	Net price	VAT
£60	£50.00	£10.00
£120	£100.00	£20.00
£240	£200.00	£40.00
£600	£500.00	£100.00
£1,200	£1,000.00	£200.00

Do you need to register for VAT?

You must register for VAT if your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period — not just in your accounting year, but in any consecutive 12 months. The threshold has been £90,000 since 1 April 2024, when it rose from £85,000, and it was left unchanged at the Budget on 28 October 2026. There is a second test: if you expect your taxable turnover to exceed £90,000 in the next 30 days alone — for example because you have just won a large contract — you must register immediately.

Taxable turnover is your standard-rated, reduced-rated and zero-rated sales added together. It is turnover, not profit. Exempt sales do not count. Once you cross the threshold you must register within 30 days of the end of the month in which you crossed it, and registration takes effect from the 1st of the month after next. If your turnover falls below £88,000, the deregistration threshold, you can apply to deregister. You can also register voluntarily below £90,000 — some businesses do, so they can reclaim VAT on their costs.

Once registered, you must charge VAT, submit VAT returns — usually every quarter — and keep digital records under Making Tax Digital for VAT, which has been mandatory for all VAT-registered businesses since 1 April 2022. Most businesses use the standard method of accounting for VAT, but HMRC also offers schemes such as the Flat Rate Scheme and the Cash Accounting Scheme for smaller businesses. One useful rule if you register late or voluntarily: you can reclaim VAT on goods you bought up to 4 years before registration if you still hold them, and on services bought up to 6 months before registration — keep the invoices, because HMRC will want to see them.

VAT on imports and exports

Goods you export outside the UK are usually zero-rated, and services supplied to businesses outside the UK are often outside the scope of UK VAT. Goods you import are a different matter: VAT is charged at the border, and marketplaces collect VAT on imported goods worth £135 or less. Non-resident businesses have no registration threshold at all — they must register from their first UK taxable supply. If you sell online across borders, check the rules for each country rather than assuming the UK rates apply.

Flat Rate Scheme and common VAT mistakes

Small businesses can choose the Flat Rate Scheme instead of standard VAT accounting. You charge VAT at the normal rate, but you pay HMRC a fixed percentage of your VAT-inclusive turnover — the percentage depends on your trade — and you cannot reclaim VAT on most of your purchases. It is simpler and it can be cheaper if your costs are low, but it is worse if you buy a lot of VAT-able goods, because you lose the input VAT reclaim. There is a limited-cost-business test that pushes the rate to 16.5% if you spend very little on goods, which removes most of the benefit. Run both methods on your real numbers before choosing; the scheme is a genuine saving for some trades and a trap for others.

The most common VAT mistakes are simple ones. Charging VAT when you are not registered: if you are below the threshold and not registered, you must not charge VAT, and you cannot reclaim it either. Using the wrong rate: hot food sold to eat in is standard-rated, while most cold takeaway food is zero-rated — the boundary is the temperature and the setting, not the food itself, and HMRC has fought court cases over it. Forgetting that the threshold is a rolling 12 months: many businesses cross £90,000 in a busy stretch and only notice at the year end, by which time they are already late and owe VAT on the sales since the registration date. And treating the VAT you collect as your money: it is not — it belongs to HMRC, and the businesses that get into trouble are usually the ones that spent it before the quarterly return was due. Keep it in a separate account.

Sources: GOV.UK “VAT rates on different goods and services” (20%, 5%, 0%, exempt); GOV.UK “Register for VAT” (threshold £90,000, deregistration £88,000, 30-day deadline); GOV.UK “VAT: how it works”. Checked 13 November 2026.

Important: Everything on this site is general information for planning purposes only. It is not professional financial advice, not tax advice, and not a substitute for advice from a qualified adviser. Rates and thresholds are for the UK tax year 2026/27 (6 April 2026 – 5 April 2027) unless stated otherwise, and can change. Figures are estimates — your actual pay depends on your tax code, pension scheme, student loan plan and other deductions. Check the current figures on GOV.UK or speak to a qualified adviser before acting.