VAT (Value Added Tax) is the UK’s consumption tax charged on most goods and services. The standard rate is 20%, a reduced rate of 5% applies to certain items (domestic fuel and power, children’s car seats, certain energy-saving installations), and zero-rate (0%) covers most food, books, children’s clothing and public transport. Some supplies are VAT-exempt (insurance, education, postage stamps, most financial services) — the difference matters because zero-rated businesses can reclaim input VAT on costs while exempt businesses cannot.
This calculator does the two common VAT operations in one place: adding VAT to a net (ex-VAT) figure to produce a gross (inc-VAT) price, and removing VAT from a gross price to find the net amount and the VAT element. For 20% VAT, divide by 1.2 to remove it; for 5% divide by 1.05. The maths is trivial but error-prone — this tool removes the mental burden when invoicing, pricing or reconciling expenses.
Useful for small businesses approaching the £90,000 VAT registration threshold (the figure that triggers compulsory registration in any rolling 12-month period since April 2024), freelancers comparing flat-rate scheme percentages, contractors raising invoices, accountants checking journal entries, and consumers wanting to know the pre-tax cost of a purchase. From April 2022, Making Tax Digital for VAT applies to every VAT-registered business regardless of turnover — you must keep digital records and file via MTD-compatible software (Xero, QuickBooks, Sage, FreeAgent, etc.).
The calculator is UK-wide — VAT rates do not differ across England, Scotland, Wales and Northern Ireland. Different rules apply to Northern Ireland for trade with the EU under the Windsor Framework, but the domestic rates are identical. For Flat Rate Scheme businesses (turnover under £150,000), you still charge customers 20% but pay HMRC a single flat percentage of gross turnover — usually 4%-16.5% depending on trade. The calculator does not compute Flat Rate liability directly; check your sector percentage on gov.uk. For VAT on imports under £135 or distance sales into the UK, separate rules apply that this tool does not cover.
How to use this calculator
1
Choose direction
Pick "Add VAT" to find the gross price from a net amount, or "Remove VAT" to extract the net price and VAT element from a gross figure on a receipt or invoice.
2
Enter the amount
Type the relevant figure — net price (for adding) or gross price (for removing). Decimals are accepted and rounded to the nearest penny in the output.
3
Select VAT rate
Choose 20% standard, 5% reduced or 0% zero. Most items use 20%. Use 5% for domestic energy bills and certain energy-efficiency installations.
4
Read the breakdown
See net, VAT and gross side by side. Copy figures straight into accounting software, invoices or expense claims.
5
Check registration threshold
If your business turnover is approaching £90,000 in any rolling 12 months, register for VAT before you cross the line. Late registration triggers penalties plus backdated VAT due.
What this calculator does NOT include
•Flat Rate Scheme (FRS)
•Annual Accounting Scheme
•Cash Accounting Scheme
•Partial Exemption rules
•Reverse charge construction services CIS
Common mistakes to avoid
!Forgetting that the Personal Allowance tapers at £1 per £2 above £100,000 income — creates 60% effective marginal rate up to £125,140 (67.5% in Scotland).
!Not adding student loan repayment — adds 9% (Plans 1/2/4/5) or 6% (Postgrad) above the plan-specific threshold on top of tax + NI.
!Assuming Scottish bands match rUK — Scotland has 6 bands (19/20/21/42/45/48%) with the higher rate kicking in at £43,663 (not £50,270).
!Using gross figures for pension contributions when sacrificed via payroll — salary sacrifice reduces taxable income at source, simplifying the maths.
The standard UK VAT rate is 20%. A reduced rate of 5% applies to certain items such as domestic energy and children's car seats. Some items are zero-rated (0%).
How do I remove VAT from a price?
To remove 20% VAT from a price, divide by 1.2. For 5% VAT, divide by 1.05. Our calculator does this automatically.
What items are exempt from VAT?
Some goods and services are VAT-exempt including insurance, postage stamps, education, and health services. Exempt is different from zero-rated — zero-rated businesses can reclaim VAT on purchases.
When must I register for VAT?
You must register if your taxable turnover exceeds £90,000 in any rolling 12-month period (since April 2024), or you expect it to exceed £90,000 in the next 30 days. Voluntary registration below this threshold is allowed and can be useful if you sell mostly to other VAT-registered businesses or have significant input VAT to reclaim on purchases.
Can I reclaim VAT on business expenses?
Yes, if you are VAT-registered. You can reclaim input VAT on goods and services used for your business, including stock, equipment, professional fees and most overheads. You cannot reclaim VAT on entertainment for non-employees, most cars, or anything purely personal. Pre-registration VAT can be reclaimed on goods bought up to 4 years before, services 6 months before.
What is the VAT Flat Rate Scheme?
Businesses with turnover under £150,000 can pay a single flat percentage of gross sales to HMRC (typically 4%-16.5%, sector-specific) instead of normal VAT accounting. You still charge customers 20% but keep the difference as profit. From 2017 limited-cost traders pay 16.5% regardless of sector — significantly less attractive for service businesses with low expenses.
How often do I file VAT returns?
Most businesses file quarterly, with the return and payment due one month and 7 days after the period end. The Annual Accounting Scheme allows a single yearly return with monthly or quarterly instalments — useful for cash-flow planning. Making Tax Digital for VAT applies to all VAT-registered businesses regardless of turnover, requiring digital records and MTD-compatible software.
Do I charge VAT to overseas customers?
Generally no for business-to-business sales of goods or services to customers outside the UK — the reverse charge or zero rating typically applies. For consumer sales it depends on the country, the product and the value. Northern Ireland has special rules for goods trade with the EU under the Windsor Framework. Get specialist advice if you sell significantly across borders.
What happens if I am late registering for VAT?
HMRC can backdate the registration to when you should have registered and demand the VAT you should have charged plus penalties of 5%-15% of the unpaid VAT. You cannot recover VAT from customers retrospectively in most cases, so this can be very expensive. Voluntary disclosure before HMRC asks reduces penalties significantly.
Is there VAT on takeaway food?
It depends. Cold takeaway food (sandwiches, salads, cold drinks except alcohol and some bottled water) is generally zero-rated. Hot takeaway food, eat-in food and drinks consumed on premises, and confectionery, crisps, ice cream, alcohol and most soft drinks attract 20% VAT. This famously complex area created the 2012 "pasty tax" controversy. HMRC publishes detailed guidance for hospitality businesses.