Tiny ToolkitUK VAT Calculator
Calculate VAT for UK businesses. Add or remove VAT at standard (20%), reduced (5%), or zero (0%) rates.
Important Notice
This calculator is provided for guidance only and does not constitute financial or legal advice. Always verify VAT calculations with official HMRC guidance and consult a qualified accountant for business tax matters. VAT rules and rates may change.
About UK VAT
VAT (Value Added Tax) is a consumption tax applied to most goods and services in the UK. This calculator helps you quickly add VAT to net amounts or remove VAT from gross amounts using the current UK VAT rates.
UK VAT Rates
According to GOV.UK, the UK has three main VAT rates:
- Standard Rate (20%): The most common VAT rate, applied to most goods and services. This rate has been in effect since January 4, 2011.
- Reduced Rate (5%): Applied to specific items including:
- Children's car seats
- Domestic fuel and power
- Energy-saving materials
- Mobility aids for elderly people
- Zero Rate (0%): Applied to essential items including:
- Most food for human consumption
- Children's clothes and footwear
- Books, newspapers, and magazines
- Prescription medicines
For a complete list of goods and services under each rate, see GOV.UK's comprehensive VAT rates guide.
How to Use This Calculator
Adding VAT
Use "Add VAT" mode when you have a net price (excluding VAT) and need to calculate the gross price (including VAT) for invoicing or pricing.
- Enter the net amount (price without VAT)
- Select the applicable VAT rate
- View the VAT amount and total gross amount
Removing VAT
Use "Remove VAT" mode when you have a gross price (including VAT) and need to calculate the net price and VAT amount.
- Enter the gross amount (price with VAT)
- Select the VAT rate that was applied
- View the net amount and VAT amount
Common Use Cases
Business & Accounting
- Creating invoices with VAT
- Processing VAT returns
- Calculating reclaimable VAT
- Price list creation
Retail & E-commerce
- Setting product prices
- Display prices inc/exc VAT
- Calculating margins
- Checkout calculations
Freelancers & Contractors
- Quote preparation
- Invoice generation
- Expense tracking
- VAT registration planning
Personal Finance
- Understanding bills
- Comparing prices
- Budget planning
- Expense claims
VAT Registration
According to UK VAT regulations, the VAT registration threshold is £90,000 (as of 2024) — the highest in the world. Once registered, businesses charge VAT on taxable supplies and can reclaim VAT on business expenses.
- Mandatory Registration: Required when taxable turnover exceeds £90,000 in a 12-month period
- Voluntary Registration: Can register below threshold to reclaim input VAT
- VAT Threshold: Monitored on a rolling 12-month basis
- Deregistration: Available when turnover falls below £88,000
VAT History & Statistics
VAT was introduced in the UK in 1973, replacing Purchase Tax. According to UK government data, VAT is now the third-largest source of government revenue.
Historical Rates
- 1973: Introduced at 10%
- 1974: Reduced to 8%
- 1979: Increased to 15%
- 1991: Increased to 17.5%
- 2011: Increased to 20% (current)
Revenue Impact
- 1978-79: £4.9 billion (6.91% of revenue)
- 2022-23: £160.1 billion (15.70% of revenue)
- Third-largest government revenue source
- Administered by HM Revenue & Customs
Practical VAT Calculation Examples
Example 1: Adding 20% VAT
Scenario: You're creating an invoice for services worth £500 (excluding VAT).
Net Amount: £500.00
VAT (20%): £500 × 0.20 = £100.00
Gross Amount: £600.00
Example 2: Removing 20% VAT
Scenario: A receipt shows £240 including VAT. You need the net amount.
Gross Amount: £240.00
Net Amount: £240 ÷ 1.20 = £200.00
VAT Amount: £40.00
Example 3: Reduced Rate (5%)
Scenario: Home energy bill of £200 with 5% VAT.
Net Amount: £200.00
VAT (5%): £200 × 0.05 = £10.00
Gross Amount: £210.00
VAT Calculation Formulas
Adding VAT
VAT Amount = Net Amount × (VAT Rate ÷ 100)
Gross Amount = Net Amount + VAT Amount
Removing VAT
Net Amount = Gross Amount ÷ (1 + VAT Rate ÷ 100)
VAT Amount = Gross Amount - Net Amount
Pro Tips
- Always specify whether prices are inclusive or exclusive of VAT on quotes and invoices
- Keep accurate records of VAT collected and paid for your VAT returns
- Use the correct VAT rate for different goods and services
- Check if you can reclaim VAT on business expenses
- Submit VAT returns and payments on time to avoid penalties
- Consider using accounting software for automatic VAT calculations
Frequently Asked Questions
What is the current UK VAT rate?
The standard UK VAT rate is 20%, effective since January 4, 2011. There are also reduced rates: 5% for specific items like children's car seats and home energy, and 0% for essentials like most food and children's clothes. See GOV.UK for the complete list.
How do I calculate VAT on an invoice?
To add VAT: multiply the net amount by the VAT rate (e.g., £100 × 20% = £20 VAT, total £120). To remove VAT: divide the gross amount by 1.20 (e.g., £120 ÷ 1.20 = £100 net). Our calculator does this instantly for all UK VAT rates.
What is the difference between VAT-inclusive and VAT-exclusive prices?
VAT-exclusive (net) prices show the amount before VAT is added, typically used in B2B transactions. VAT-inclusive (gross) prices include VAT and show the total amount paid, commonly used in B2C retail. Always clarify which you're using on invoices.
Do I need to register for VAT in the UK?
You must register for VAT if your taxable turnover exceeds £90,000 in any 12-month period (the highest threshold globally). You can voluntarily register below this threshold to reclaim VAT on business expenses. Registration is managed through HMRC.
What items are zero-rated for VAT?
Zero-rated items include most food for human consumption, children's clothes and footwear, books and newspapers, prescription medicines, and certain exports. These are technically "taxable" at 0%, unlike exempt items. Check GOV.UK guidance for comprehensive lists.
Can I reclaim VAT on business expenses?
Yes, VAT-registered businesses can reclaim VAT paid on business expenses (input VAT) against VAT charged to customers (output VAT). Keep proper invoices and receipts. Submit VAT returns quarterly or monthly to HMRC showing net VAT owed or reclaimable.