VAT Calculator

Value Added Tax (VAT) is a consumption tax applied at each stage of a supply chain, ultimately borne by the end consumer. In the UK, HMRC administers three VAT rates: the standard rate of 20%, which applies to most goods and services; the reduced rate of 5%, which covers items such as domestic fuel, children's car seats, and energy-saving materials; and the zero rate of 0%, which applies to most food, children's clothing, books, and public transport.

To add VAT to a net (excluding VAT) price, multiply by (1 + rate). So a £100 net price at 20% becomes £120 gross. To remove VAT from a gross (including VAT) price, divide by (1 + rate). A £120 gross price at 20% gives a £100 net price. The VAT amount in both cases is the difference between gross and net.

Businesses registered for VAT must charge it on taxable supplies and submit VAT returns, usually quarterly. The current VAT registration threshold is £90,000 in VATable turnover over any rolling 12-month period. Once registered, businesses can reclaim the VAT they pay on business expenses — making VAT largely neutral for VAT-registered businesses, with the tax falling on the final consumer.

Zero-rated and exempt supplies are not the same. Zero-rated goods are still VATable supplies, but at 0% — meaning businesses can still reclaim input VAT on related costs. Exempt supplies sit outside the VAT system entirely, meaning input VAT on related costs cannot generally be recovered. This distinction is particularly important for businesses in sectors such as finance, insurance, and education.