Understanding UK VAT
Value Added Tax (VAT) is a consumption tax charged on most goods and services supplied in the United Kingdom. It is one of the largest sources of revenue for HM Treasury and is administered by HM Revenue & Customs (HMRC). Most UK businesses must register for VAT once their taxable turnover exceeds the current threshold (set at £90,000 for the 2025/26 tax year), at which point they are obliged to charge VAT on their sales, file periodic VAT returns, and pay the collected VAT to HMRC.
Although shoppers rarely see a separate VAT line at the till, the tax is built into the displayed price of nearly every product and service they buy. Knowing how VAT works is useful when comparing deals, validating invoices, claiming back VAT on business expenses, or simply working out the pre-tax price of a quote. This page gives you a free, instant calculator for the three main UK VAT rates, along with a practical guide to when each rate applies.
The three UK VAT rates
Standard rate (20%) applies to the majority of taxable supplies in the UK. The current 20% rate has been in force since 4 January 2011. Most consumer goods, electronics, clothing, restaurant meals, professional services and alcohol are charged at the standard rate.
Reduced rate (5%) applies to a narrower list of goods and services defined by HMRC. The most common examples are domestic fuel and power (gas and electricity bills), child car seats, mobility aids for older people, smoking-cessation products such as nicotine patches, and certain energy-saving materials installed in residential property. To remove the reduced 5% rate from a VAT-inclusive price, divide the total by 1.05; to add it, multiply the net amount by 1.05.
Zero rate (0%) is a special case: the supply is still taxable, but the rate applied is 0%, so the customer pays no VAT. Most basic foods (milk, bread, fruit, vegetables, raw meat), children's clothing and footwear, books, newspapers, magazines, and public transport fares are zero-rated. Because zero-rated supplies are still treated as taxable, businesses can usually reclaim the input VAT they paid on related costs. This is different from VAT-exempt supplies (such as most financial services, insurance premiums, and education), which are not taxable and do not give the right to reclaim input VAT.
How to use this calculator
Enter a price in pounds sterling and pick the calculation mode that matches your needs. Add VAT takes a net (pre-tax) amount and adds the chosen rate, useful when a supplier quotes you a price before tax. Remove VAT takes a VAT-inclusive price and strips out the tax, useful for verifying receipts or working out the underlying cost. VAT Only returns just the tax amount, helpful for expense claims or comparing headline prices between inclusive and exclusive quotations.
All three modes update in real time as you type or change the rate — there is no submit button to click. Results are formatted as GBP with two decimal places. The calculator works on any modern device, including mobile phones and tablets, and runs entirely in your browser: no data is sent to a server, so the prices you enter stay private.
VAT calculation formulas
- Add VAT (20%): Gross = Net × 1.20 · VAT = Net × 0.20
- Remove VAT (20%): Net = Gross ÷ 1.20 · VAT = Gross − Net
- Add VAT (5%): Gross = Net × 1.05 · VAT = Net × 0.05
- Remove VAT (5%): Net = Gross ÷ 1.05 · VAT = Gross − Net
- Zero rate (0%): Gross = Net · VAT = £0.00
A worked example
Imagine a UK retailer lists a coat at £120.00 and the price is inclusive of 20% VAT. To find the net (pre-tax) price, divide £120.00 by 1.20, which gives £100.00. The VAT element is £120.00 minus £100.00, which is £20.00. So a £120.00 ticket breaks down into £100.00 net + £20.00 VAT. Conversely, if a business quotes you a net price of £250.00 for a service, the gross price including 20% VAT is £250.00 × 1.20 = £300.00, and the VAT is £50.00.
For authoritative guidance on UK VAT rates, registration thresholds and exemptions, always refer to the official HMRC website (gov.uk/tax-on-shopping and gov.uk/vat-rates). This tool is provided for general convenience and does not constitute tax or accounting advice.
