UK VAT Calculator 2025/26

Add or remove VAT instantly. Works with standard, reduced, and custom rates. See the exact breakdown of net amount, VAT, and gross total.

This calculator provides estimates for UK VAT calculations. VAT rules can be complex depending on the type of goods or services involved. Always consult HMRC guidance or a qualified accountant for business VAT matters.

How UK VAT Works in 2025/26

Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in the UK. It’s collected at each stage of the supply chain, but ultimately paid by the end consumer. If you’re buying something at a shop, the VAT is already included in the price. If you’re a business invoicing clients, you typically show the net amount and VAT separately.

VAT-registered businesses charge VAT on their sales (output tax) and can reclaim VAT on their business purchases (input tax). The difference is what they pay to HMRC. Businesses must register for VAT once their taxable turnover exceeds £90,000 in any 12-month period (the 2025/26 threshold).

Current VAT Rates


Standard Rate — 20% Applies to most goods and services. This is the default rate and covers everything from electronics and clothing to professional services and restaurant meals.

Reduced Rate — 5% Applies to certain goods and services including domestic energy (gas and electricity), children’s car seats, smoking cessation products, and the installation of energy-saving materials in residential properties.

Zero Rate — 0% Technically these items are VAT-taxable but at 0%. This matters for businesses because they can still reclaim input VAT on related purchases. Zero-rated items include most food and drink (but not restaurant meals or hot takeaways), children’s clothing and shoes, books and newspapers, public transport, and new-build residential properties.

VAT-Exempt Some goods and services are exempt from VAT entirely. This means no VAT is charged, but businesses also cannot reclaim input VAT on related purchases. Exemptions include insurance, financial services, education, health services, and residential property sales (except new builds).

How to Calculate VAT

Adding VAT to a net amount: Multiply the net amount by the VAT rate and add it to the original. For standard rate: Net × 1.20 = Gross. So £100 net becomes £100 × 1.20 = £120 gross, with £20 VAT.

Removing VAT from a gross amount: Divide the gross amount by (1 + VAT rate). For standard rate: Gross ÷ 1.20 = Net. So £120 gross becomes £120 ÷ 1.20 = £100 net, with £20 VAT. A common shortcut for 20% VAT is to divide by 6 — £120 ÷ 6 = £20 VAT.

Worked Examples

Example 1
Freelancer invoicing a client

You’re billing £2,500 for a project (net). VAT at 20%: £2,500 × 0.20 = £500.
Your invoice total: £3,000 (£2,500 + £500 VAT).

Example 2
Working out VAT on a receipt

You bought office equipment for £599.99 including VAT. Net amount: £599.99 ÷ 1.20 = £499.99.
VAT paid: £100.00.
If your business is VAT-registered, you can reclaim that £100 as input tax.

Example 3
Mixed VAT rates

You’re buying food (zero-rated) and cleaning products (standard rate) for your business. The cleaning products cost £60 including VAT – that’s £50 net + £10 VAT.
The food costs £40 with no VAT.
You can reclaim the £10 VAT on cleaning products but there’s no VAT to reclaim on the food.

Common Mistakes to Avoid

  1. Calculating VAT as 20% of the gross amount. If an item costs £120 including VAT, the VAT is £20 (£120 ÷ 1.20 = £100 net), not £24 (20% of £120). This is one of the most common errors in business accounting.
  2. Forgetting the VAT registration threshold. Once your taxable turnover hits £90,000 in a rolling 12-month period, you must register for VAT. You can register voluntarily below this threshold, which can be beneficial if most of your customers are VAT-registered businesses.
  3. Charging VAT on exempt items. If you provide VAT-exempt services (like certain financial or educational services), you cannot charge VAT on them — but you also can’t reclaim input VAT on related costs.
  4. Missing the Flat Rate Scheme. Small businesses with turnover under £150,000 can use the Flat Rate Scheme, paying a fixed percentage of gross turnover (rates vary by industry, typically 10–14.5%) instead of tracking input and output VAT separately. For businesses with low input VAT, this can simplify administration significantly.

If you’re self-employed and working out your VAT obligations, the take-home salary calculator has a self-employed mode that handles income tax and National Insurance alongside your VAT figures.

Frequently Asked Questions

When do I need to register for VAT?

You must register when your taxable turnover exceeds £90,000 in any 12-month rolling period, or if you expect it to exceed £90,000 in the next 30 days. You can register voluntarily below this threshold. Once registered, you must charge VAT on all taxable sales and file VAT returns (usually quarterly).

Can I reclaim VAT on business expenses?

Yes, if your business is VAT-registered. You can reclaim VAT on goods and services purchased for business use, provided you have a valid VAT invoice. You cannot reclaim VAT on business entertainment, the purchase of a car (with some exceptions), or items used for personal purposes.

What’s the difference between zero-rated and exempt?

Both result in no VAT being charged to the customer. The difference matters for businesses: zero-rated businesses can still reclaim input VAT on their purchases, while exempt businesses cannot. This makes zero-rating more favourable for the business.

Do I need to show VAT on my invoices?

If you’re VAT-registered, you must show your VAT registration number, the VAT rate charged, the VAT amount, and the total including and excluding VAT on all invoices. For simplified invoices (supplies under £250), fewer details are required.