United Kingdom VAT calculator

The three UK VAT rates in 2026

The United Kingdom operates three VAT rates under HMRC:

• Standard rate: 20% — applies to most goods and services, including electronics, restaurants (eat-in), most retail, professional services, alcohol and adult clothing.
• Reduced rate: 5% — domestic fuel and power, child car seats, mobility aids for older people, smoking-cessation products, energy-saving materials installed in homes.
• Zero rate: 0% — most food (excluding hot takeaway and restaurant meals), children's clothing and footwear, books and newspapers (including e-books since May 2020), public transport, prescription medicines, and exports outside the UK.

The standard rate has been 20% since the January 2011 increase from 17.5%. The reduced rate has been 5% since 1997. Both rates are set by Parliament; HMRC enforces them.

VAT-inclusive vs VAT-exclusive pricing

Almost all UK consumer pricing is VAT-inclusive: the price you see on a shop shelf includes the 20% VAT, by law (Price Marking Order 2004). Business-to-business invoicing usually shows the net price plus VAT separately as a line item. The math:

• Add VAT to a net price: multiply by 1.20 (standard rate) or 1.05 (reduced).
• Remove VAT from a gross price: divide by 1.20 to get the net (standard rate), or divide by 1.05 for reduced. The VAT portion is gross − net.

Worked example: a laptop is advertised at £1,200 in a UK store. The price is VAT-inclusive. The net (ex-VAT) price the retailer recognizes is 1200 ÷ 1.20 = £1,000. The VAT element is £200. A business customer who can reclaim VAT effectively pays £1,000; a consumer pays the full £1,200.

VAT registration threshold and small-business rules

UK businesses must register for VAT once their taxable turnover exceeds £90,000 over a rolling 12-month window (the 2024 increase from £85,000, still in effect through 2026). Below that threshold, registration is voluntary. Voluntary registration can be worthwhile for businesses that sell mainly to other VAT-registered businesses (who reclaim the input VAT anyway), since it allows reclaiming VAT on business expenses.

Businesses with turnover below £150,000 can opt into the Flat Rate Scheme: instead of tracking VAT on every input and output, you pay a single flat percentage of turnover (varies 4%–14.5% by industry) to HMRC. The math simplifies bookkeeping at the cost of slightly higher VAT paid for businesses with high VAT-able inputs.

Common UK VAT mistakes

• Hot food vs cold food. Cold sandwiches are zero-rated; the same sandwich heated up to be served hot is 20% standard-rated. Coffee chains have made entire pricing strategies around this distinction.
• Books vs e-books. Both have been zero-rated since May 2020. Audiobooks remain at 20% standard rate.
• Children's clothing. Zero-rated up to specific size thresholds — generally up to chest measurement 32 inches for tops and a defined max-size schedule HMRC publishes. Adult-size clothing is 20% even if branded as "boys" or "girls."
• Domestic energy. Gas and electricity for domestic use is at the 5% reduced rate, but only after you tick the box on the supplier's declaration. Many bills default to 20% if no declaration is on file.

How to use the calculator above

Type the amount you have, select whether it's net (you want to add VAT) or gross (you want to remove VAT), and the calculator returns the other two numbers — net, VAT, and gross. For 5% reduced-rate items, change the rate field. The math is what every UK accountant does daily; the only difference is speed.