UK VAT Rates

VAT Calculator

Add or remove VAT from any amount. Supports standard (20%), reduced (5%), and zero rate calculations.

Net Amount£1000.00
VAT (20%)£200.00
Gross Amount£1200.00

UK VAT Rate Guide

Standard Rate (20%)20%

Most goods and services: electronics, furniture, professional services, clothing, etc.

Reduced Rate (5%)5%

Home energy, children's car seats, smoking cessation products, some home renovations.

Zero Rate (0%)0%

Food (most), children's clothes, books, newspapers, public transport, prescription medicines.

VAT Registration Thresholds

Mandatory Registration

£90,000

VAT taxable turnover in last 12 months

  • Must register within 30 days of exceeding
  • Or expect to exceed in next 30 days

Voluntary Registration

Any turnover

You can register voluntarily at any time

  • Reclaim VAT on business purchases
  • Appear more established to clients

Making Tax Digital (MTD)

All VAT-registered businesses must use MTD-compatible software to keep records and submit VAT returns. AccountsOS is fully MTD-compliant.

VAT Schemes for Small Businesses

Flat Rate Scheme

Turnover under £150,000

Pay a fixed percentage of turnover, keep the difference. Less admin, potentially higher profits.

Cash Accounting

Turnover under £1.35m

Pay VAT when you receive payment, not when you invoice. Better for cash flow.

Annual Accounting

Turnover under £1.35m

Make quarterly payments based on estimates, one annual return. Simpler admin.

Frequently Asked Questions About UK VAT

What is the current UK VAT rate?
The standard UK VAT rate is 20%. There is also a reduced rate of 5% for certain goods and services (like home energy and children's car seats), and a zero rate (0%) for essentials such as most food, children's clothing, books, and public transport.
When do I need to register for VAT?
You must register for VAT if your VAT taxable turnover exceeds £90,000 in the last 12 months, or if you expect it to exceed £90,000 in the next 30 days alone. You must register within 30 days of exceeding the threshold. You can also register voluntarily at any turnover level to reclaim VAT on business purchases.
What is the VAT threshold for 2024/25?
The VAT registration threshold for the 2024/25 tax year is £90,000. This was increased from £85,000 in April 2024. The deregistration threshold is £88,000. If your turnover falls below this level, you may apply to deregister.
How do I calculate VAT?
To add VAT: multiply the net amount by 1.20 (for 20% VAT) to get the gross amount. To remove VAT: divide the gross amount by 1.20 to get the net amount. The VAT amount is the difference between gross and net. For example, £100 + 20% VAT = £120 gross, with £20 being the VAT.
What is Making Tax Digital (MTD) for VAT?
Making Tax Digital is a government initiative requiring all VAT-registered businesses to keep digital records and submit VAT returns using MTD-compatible software. This has been mandatory for all VAT-registered businesses since April 2022, regardless of turnover.
Can I reclaim VAT on business expenses?
Yes, if you're VAT registered, you can reclaim VAT on most business expenses including equipment, software, professional services, and office supplies. You cannot reclaim VAT on business entertainment, goods for personal use, or purchases from non-VAT registered suppliers. Keep VAT receipts as evidence.

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How This Calculator Works

This calculator performs two core VAT arithmetic operations based on the mode you select, using the standard UK VAT rates:

Adding VAT (Net to Gross)

Multiplies your net amount by (1 + VAT rate). For the standard 20% rate, this means multiplying by 1.20. A net amount of £1,000 becomes £1,200 gross, with £200 being the VAT element.

Removing VAT (Gross to Net)

Divides your gross amount by (1 + VAT rate). For the standard 20% rate, this means dividing by 1.20. A gross amount of £1,200 gives a net of £1,000 with £200 VAT. A common mistake is subtracting 20% from the gross - this gives the wrong answer.

Three Rate Options

The calculator supports the standard rate (20%) for most goods and services, the reduced rate (5%) for items like home energy and children's car seats, and the zero rate (0%) for essentials like most food, children's clothing, and books.

Worked Example: £10,000 Invoice

You are a VAT-registered IT consultant invoicing a client £10,000 for project work. Here is how VAT applies at the standard 20% rate:

Adding VAT to your invoice

Net amount (your fee)£10,000.00
VAT at 20% (£10,000 x 0.20)£2,000.00
Gross invoice total£12,000.00

The other direction: extracting VAT from a receipt

You receive a £12,000 gross receipt and need to work out the VAT content:

Gross amount£12,000.00
Net amount (£12,000 / 1.20)£10,000.00
VAT element£2,000.00

A common mistake: taking 20% off £12,000 gives £2,400, not £2,000. Always divide by 1.20 (not multiply by 0.80) to extract the correct VAT amount from a gross figure.

When to Use This Calculator

Creating Invoices

Work out the VAT-inclusive total to show on invoices when you know your net fee. Ensures your invoices are compliant with HMRC requirements.

Processing Receipts

Extract the VAT element from gross receipts so you can reclaim input VAT correctly on your VAT return.

Quoting Clients

When clients ask for a price, quickly calculate whether to quote net or gross, and what the total including VAT will be.

VAT Return Preparation

Double-check VAT amounts on transactions before submitting your quarterly or annual VAT return to HMRC.

Important Considerations for 2025/26

VAT Registration Threshold: £90,000

From April 2024 the mandatory VAT registration threshold increased to £90,000. You must register if your VAT taxable turnover exceeds this in any rolling 12-month period, or if you expect it to exceed £90,000 in the next 30 days. The deregistration threshold is £88,000.

Flat Rate Scheme

Small businesses with turnover under £150,000 can join the Flat Rate Scheme, paying a fixed percentage of gross turnover instead of tracking input and output VAT. The percentage varies by industry (e.g., 14.5% for IT consultancy). New businesses get an additional 1% discount in their first year of VAT registration.

Making Tax Digital (MTD)

All VAT-registered businesses are required to keep digital records and submit VAT returns using MTD-compatible software. Paper returns are no longer accepted. Penalties apply for non-compliance under the new points-based penalty system introduced in January 2023.

VAT Return Deadlines

Most businesses submit quarterly VAT returns. Each return is due one month and seven days after the end of the VAT quarter. Late submissions now accrue penalty points, and a £200 penalty is charged once the points threshold is reached.

Reverse Charge Mechanism

If you purchase services from overseas suppliers, the domestic reverse charge may apply. You account for both the output VAT and reclaim input VAT on the same return, resulting in a nil net effect if you are fully taxable. This also applies to certain construction industry services.

Related Resources

VAT Threshold 2025 Guide

Everything you need to know about the current VAT registration and deregistration thresholds.

What Is the Flat Rate VAT Scheme?

How the Flat Rate Scheme works, eligibility, and whether it saves you money.

VAT Schemes Comparison

Compare Flat Rate, Cash Accounting, and Annual Accounting schemes side by side.

Registering for VAT

Step-by-step guide to registering for VAT with HMRC.

Making Tax Digital 2026

Upcoming MTD changes and what they mean for your business.

Salary vs Dividend Calculator

Optimise your total tax position including VAT, CT, and personal tax.