Calculate Value Added Tax (VAT) with the option to remove VAT or add VAT for UK transactions with accurate rates, with this free UK VAT calculator
UK VAT Calculator
Calculate Value Added Tax for UK transactions with accurate rates
Standard Rate
Reduced Rate
Zero Rate
Total Amount
VAT Amount
Net Amount
VAT Rate
Removing VAT: Net = Amount ÷ (1 + VAT Rate)
The UK VAT Calculator helps you quickly determine the VAT amount on a purchase or service. You can calculate VAT by adding it to a net amount or removing it from a total amount.
When adding VAT:
- VAT Amount = Net Amount × VAT Rate
- Total Amount = Net Amount + VAT Amount
When removing VAT:
- Net Amount = Total Amount ÷ (1 + VAT Rate)
- VAT Amount = Total Amount – Net Amount
The UK has three main VAT rates: Standard (20%), Reduced (5%), and Zero (0%). Most goods and services are taxed at the standard rate.
Adding VAT Example
Let’s say you want to calculate VAT on a £100 product with the standard VAT rate of 20%:
Net Amount = £100
VAT Rate = 20% or 0.20
Calculate the VAT amount:
VAT Amount = £100 × 0.20 = £20
Calculate the total amount:
Total Amount = £100 + £20 = £120
Removing VAT Example
Now, let’s say you have a total amount of £120 and want to calculate the net amount and VAT:
Total Amount = £120
VAT Rate = 20% or 0.20
Calculate the net amount:
Net Amount = £120 ÷ (1 + 0.20) = £120 ÷ 1.20 = £100
Calculate the VAT amount:
VAT Amount = £120 – £100 = £20
Reduced Rate Example
For domestic fuel and power, the reduced VAT rate of 5% applies. Let’s calculate VAT on a £200 energy bill:
Net Amount = £200
VAT Rate = 5% or 0.05
Calculate the VAT amount:
VAT Amount = £200 × 0.05 = £10
Calculate the total amount:
Total Amount = £200 + £10 = £210
UK VAT Rates Explained
The UK has three main VAT rates that apply to different types of goods and services:
Standard Rate: 20%
Reduced Rate: 5%
Zero Rate: 0%
What Each Rate Applies To
Standard Rate (20%): Most goods and services including:
- Adult clothing and footwear
- Electronics and technology products
- Most services including restaurants, hairdressers, and professional services
- Alcoholic drinks, tobacco products
- Jewelry and other luxury items
Reduced Rate (5%): Specific goods and services including:
- Domestic fuel and power (gas, electricity, heating oil)
- Children’s car seats
- Residential conversions and renovations
- Some energy-saving materials
- Women’s sanitary products
Zero Rate (0%): Essential goods including:
- Most food and drink (excluding catering and hot takeaways)
- Children’s clothing and footwear
- Books, newspapers, and magazines
- Public transport
- Prescription medicines and medical aids
VAT Exemptions in the UK
Some goods and services are exempt from VAT, meaning no VAT is charged on them. However, businesses that sell exempt goods cannot reclaim the VAT they pay on their purchases.
Common VAT exemptions include:
- Insurance, finance, and credit
- Education and vocational training
- Healthcare provided by doctors, dentists, and other health professionals
- Postal services
- Funeral services
- Physical education and sports activities
- Cultural services by eligible bodies
- Lotteries, betting, and gaming
VAT Registration Thresholds
In the UK, businesses must register for VAT if their taxable turnover exceeds a certain threshold:
- Registration Threshold: £85,000 (as of 2023)
- Deregistration Threshold: £83,000 (as of 2023)
Once registered, businesses must charge VAT on their taxable supplies and submit VAT returns, usually quarterly. They can also reclaim VAT on their business purchases.
Some businesses may choose to register voluntarily even if their turnover is below the threshold, which allows them to reclaim VAT on their purchases.
Understanding UK VAT
What is VAT?
Value Added Tax (VAT) is a consumption tax levied on the value added to goods and services at each stage of production or distribution. In the UK, VAT is administered by HM Revenue and Customs (HMRC).
How VAT Works
VAT is collected by businesses on behalf of HMRC. Businesses charge VAT on their sales (output tax) and can reclaim VAT they pay on their purchases (input tax). The difference is paid to or reclaimed from HMRC.
VAT Rates History
The standard rate of VAT in the UK has changed over time. It was introduced at 10% in 1973, increased to 15% in 1979, then to 17.5% in 1991. It was temporarily reduced to 15% during the financial crisis (2008-2010) and increased to 20% in 2011, where it remains today.
VAT Invoices
Registered businesses must provide VAT invoices that include specific information: their VAT number, invoice date, invoice number, customer name, description of goods or services, and the VAT rate applied. For supplies over £250, more detailed information is required.
VAT Returns
Registered businesses must submit VAT returns to HMRC, usually quarterly. These returns detail the VAT charged on sales and the VAT paid on purchases. Most businesses now submit returns online through Making Tax Digital (MTD) compatible software.
VAT Schemes
HMRC offers several VAT schemes to simplify accounting for smaller businesses, including the Flat Rate Scheme, Annual Accounting Scheme, and Cash Accounting Scheme. Each has specific eligibility criteria and benefits that can help businesses manage their VAT obligations more efficiently.
UK VAT Information for Businesses
VAT Registration
Businesses with a taxable turnover exceeding £85,000 must register for VAT. Registration can be done online through the HMRC website. Once registered, businesses receive a VAT number and must charge VAT on their taxable supplies, submit regular VAT returns, and keep proper VAT records for at least 6 years.
VAT Accounting
Proper VAT accounting is essential for compliance. Businesses must maintain accurate records of all sales and purchases, VAT invoices issued and received, and any adjustments or corrections. Most businesses are now required to keep digital records and submit VAT returns using Making Tax Digital (MTD) compatible software.
International VAT
Special VAT rules apply to international transactions. Goods exported from the UK are usually zero-rated, while imports are subject to VAT. Services to customers outside the UK may also be zero-rated. Businesses trading internationally must understand the place of supply rules and may need to register for VAT in other countries.
VAT Reclaims
Businesses can reclaim VAT on purchases used for business purposes. This includes goods, services, and some capital items. There are restrictions on reclaiming VAT for certain expenses, such as business entertainment, cars, and some goods used for both business and personal use (partial exemption).
VAT Penalties
HMRC can impose penalties for various VAT compliance failures, including late registration, late payment, late submission of returns, and errors in returns. Penalties can range from fixed amounts to percentages of the tax due, depending on the severity and frequency of the failure. Interest is also charged on late payments.
VAT Planning
Effective VAT planning can help businesses minimize their VAT burden legally. This includes using the most appropriate VAT scheme, timing purchases and sales strategically, understanding partial exemption rules, and taking advantage of available reliefs and exemptions. Professional advice is recommended for complex VAT situations.