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UK VAT Rates 2026
The UK has three VAT rates. The one you use depends on what type of goods or services you are selling or buying. Most everyday purchases use the standard 20% rate, but specific categories qualify for the reduced or zero rate.
| Rate | % | Applies to |
|---|---|---|
| Standard rate | 20% | Most goods and services — electronics, clothing, restaurant meals, professional services, cars, alcohol, most services |
| Reduced rate | 5% | Domestic energy (gas and electricity), children's car seats, women's sanitary products, mobility aids, some health products, insulation materials |
| Zero rate | 0% | Most food for home consumption, children's clothing and footwear (under 14), books and newspapers, prescription medicines, public transport, new residential properties, exports |
There is also a category of VAT-exempt goods and services (financial services, education, healthcare, insurance, and residential lettings). These are different from zero-rated — see the section on zero-rated vs exempt below.
How to Add VAT to a Price (Net → Gross)
Adding VAT means calculating the gross (VAT-inclusive) price from a net (ex-VAT) price. This is what businesses do when they quote prices to customers.
The formula to add 20% UK VAT
Adding 20% VAT:
Gross price = Net price × 1.20
VAT amount = Net price × 0.20
Example: £850 net × 1.20 = £1,020 gross. VAT = £170.
The formula to add 5% reduced VAT
Adding 5% VAT:
Gross price = Net price × 1.05
VAT amount = Net price × 0.05
Example: £200 energy bill (net) × 1.05 = £210. VAT = £10.
For zero-rated items (food, children's clothes, books), no calculation is needed — VAT is 0%, so the gross price equals the net price.
How to Remove VAT from a Price (Reverse VAT)
Removing VAT — also called reverse VAT or backing out VAT — means finding the net (ex-VAT) price and the VAT element from a gross (VAT-inclusive) price. This is commonly needed for:
- Bookkeeping and expense claims
- Checking a supplier invoice to confirm the VAT element
- Calculating input VAT to reclaim on a VAT return
- Converting a retail price to a trade price
The formula to remove 20% VAT
Removing 20% VAT from a gross price:
Net price = Gross price ÷ 1.20
VAT amount = Gross price − Net price
OR: VAT amount = Gross price × (20 ÷ 120) = Gross × 1/6
Example: £600 gross ÷ 1.20 = £500 net. VAT = £100.
The formula to remove 5% VAT
Removing 5% VAT from a gross price:
Net price = Gross price ÷ 1.05
VAT amount = Gross price − Net price
Example: £315 gross ÷ 1.05 = £300 net. VAT = £15.
The key insight: you always divide by (1 + VAT rate as decimal). For 20%: divide by 1.20. For 5%: divide by 1.05. For any other rate: divide by (1 + rate/100). Use our VAT calculator to do this automatically.
Worked Examples — All Three UK VAT Rates
Example 1: Adding 20% VAT to a professional service invoice
A freelance web developer charges £2,500 net for a project. Their client needs a VAT invoice showing the gross amount.
- Net (ex-VAT): £2,500.00
- VAT (20%): £2,500 × 0.20 = £500.00
- Gross (inc. VAT): £2,500 + £500 = £3,000.00
Example 2: Removing 20% VAT from a restaurant receipt
A business meal costs £156 including VAT. The accountant needs the net amount for the expense claim and the VAT to record separately.
- Gross (inc. VAT): £156.00
- Net (ex-VAT): £156 ÷ 1.20 = £130.00
- VAT element: £156 − £130 = £26.00
Example 3: 5% reduced rate on a domestic energy bill
A quarterly gas bill shows £262.50 including 5% VAT. The customer wants to know the net charge and the VAT separately.
- Gross: £262.50
- Net: £262.50 ÷ 1.05 = £250.00
- VAT (5%): £12.50
Example 4: Zero-rated children's clothing
A children's jacket priced at £45.00 is zero-rated. No VAT calculation is needed — the net price and gross price are identical at £45.00. The VAT amount is £0.
Common VAT Amounts — Quick Reference Table (20%)
These are the most commonly searched VAT calculations for the UK standard 20% rate. Bookmark this table or use our VAT calculator for any amount.
| Net (ex-VAT) | VAT (20%) | Gross (inc. VAT) | VAT in gross |
|---|---|---|---|
| £10.00 | £2.00 | £12.00 | £2.00 |
| £25.00 | £5.00 | £30.00 | £5.00 |
| £50.00 | £10.00 | £60.00 | £10.00 |
| £100.00 | £20.00 | £120.00 | £16.67 |
| £250.00 | £50.00 | £300.00 | £50.00 |
| £500.00 | £100.00 | £600.00 | £100.00 |
| £1,000.00 | £200.00 | £1,200.00 | £200.00 |
| £2,500.00 | £500.00 | £3,000.00 | £500.00 |
| £5,000.00 | £1,000.00 | £6,000.00 | £1000.00 |
| £10,000.00 | £2,000.00 | £12,000.00 | £2000.00 |
| Last column shows the VAT element within the gross price (gross ÷ 6) — use this for expense claims when you only have the VAT-inclusive total. | |||
Zero-Rated vs VAT-Exempt — The Important Difference
Many people confuse zero-rated and VAT-exempt. They both result in no VAT being charged to the customer, but they have very different implications for the business.
Zero-rated (0% VAT)
- ✓ Still technically a VAT-rated supply
- ✓ Business can register for VAT
- ✓ Business can reclaim input VAT on purchases related to zero-rated sales
- ✓ Must be included in VAT turnover for registration threshold
Examples: food, children's clothes, books, exports
VAT-exempt
- ✗ Outside the VAT system entirely
- ✗ Business may not be able to register for VAT (if only exempt supplies)
- ✗ Business cannot reclaim input VAT on purchases for exempt activities
- ✗ Not included in VAT taxable turnover
Examples: financial services, insurance, education, healthcare, residential letting
A business making only exempt supplies (e.g. a private tutor) generally cannot register for VAT and cannot reclaim input VAT on their business purchases. A food retailer making only zero-rated supplies can register voluntarily and reclaim all input VAT — sometimes resulting in a net VAT refund from HMRC.
UK VAT Registration Threshold 2026
UK businesses must register for VAT when their taxable turnover (the total of all standard-rated, reduced-rated, and zero-rated sales) exceeds £90,000 in any rolling 12-month period (2024/25 threshold — check HMRC for any Budget updates).
Once registered, you must:
- Charge VAT on all taxable sales at the correct rate
- Issue VAT invoices showing your VAT number, the net amount, VAT rate, and VAT amount
- Submit VAT returns — normally quarterly via Making Tax Digital (MTD) software
- Pay any VAT owed to HMRC (or reclaim refunds if input VAT exceeds output VAT)
Voluntary registration is allowed at any turnover level below £90,000. It is worth considering if you have significant business purchases with VAT on them — registering lets you reclaim that input VAT. This is common for new businesses investing in equipment before they reach the threshold.
Your VAT number will be in the format GB followed by 9 digits(e.g. GB 123456789). This must appear on all VAT invoices you issue.
Calculate UK VAT instantly
Add VAT to any net price or remove VAT from any gross amount. All three UK rates supported.
Open UK VAT Calculator →Frequently Asked Questions
How do I add 20% VAT to a price in the UK?
Multiply the net (ex-VAT) price by 1.20. Example: £500 net × 1.20 = £600 gross. The VAT amount is £100. Formula: VAT amount = net price × 0.20.
How do I remove VAT from a price in the UK?
Divide the gross (VAT-inclusive) price by 1.20. Example: £240 gross ÷ 1.20 = £200 net. The VAT element is £40. This is called reverse VAT or VAT extraction.
How much VAT is on £100?
On a net price of £100, 20% VAT = £20, making the gross price £120. If £100 is already a VAT-inclusive gross price, the VAT element within it is £100 ÷ 1.20 × 0.20 = £16.67, and the net price is £83.33.
What items are zero-rated for VAT in the UK?
Zero-rated (0% VAT) items include most food for home consumption, children's clothing and footwear under 14 years, books and newspapers, prescription medicines, public transport, and new residential properties.
What is the UK VAT registration threshold in 2026?
UK businesses must register for VAT when taxable turnover exceeds £90,000 in any rolling 12-month period (2024/25 threshold). Voluntary registration is allowed below this threshold to reclaim input VAT.
What is the difference between zero-rated and exempt VAT?
Zero-rated goods (0%) are still technically VAT-rated — businesses can reclaim input VAT on costs related to zero-rated sales. Exempt goods (financial services, education, healthcare) are outside the VAT system entirely — businesses cannot reclaim input VAT on costs for exempt activities.