UK VAT Calculator

Multiply the net (VAT-exclusive) price by 1 plus the VAT rate as a decimal. At the standard 20% rate, multiply by 1.20: a £500 net price becomes £600 gross, with £100 of that being VAT. At the 5% reduced rate, multiply by 1.05. At the 0% zero rate, the gross price simply equals the net price, no VAT is added.

Divide the VAT-inclusive (gross) price by 1 plus the VAT rate as a decimal, then subtract that result from the gross price to find the VAT amount. At 20%, divide by 1.20: a £600 gross price reverse-calculates to £500 net, with £100 of VAT. A common mistake is taking 20% off the gross price directly (£600 x 0.20 = £120), which overstates the VAT; the correct method always divides first.

Because the 20% rate applies to the net price, not the gross price, and the gross price is already the net price plus that 20%. Taking 20% of the gross figure calculates VAT on a base that already includes VAT, which overstates it. The correct reverse calculation divides the gross amount by 1.20 to recover the net price first, then finds VAT as the difference between gross and net.

There are three rates: the standard rate of 20%, which applies to most goods and services and has been unchanged since January 2011; the reduced rate of 5%, which applies to a specific list of items including domestic gas and electricity, children's car seats, and some sanitary and energy-saving products; and the zero rate of 0%, which applies to most food, books, newspapers, and children's clothing. Some supplies, such as financial services, insurance, and education, are VAT-exempt entirely rather than zero-rated, which is a different legal category with different implications for reclaiming input VAT.

The VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period, a figure that has held since 1 April 2024 and was left unchanged at both the Autumn 2024 and Autumn 2025 Budgets. You must register with HMRC within 30 days of the end of the month in which you crossed the threshold, or immediately if you expect to cross it within the next 30 days alone. The deregistration threshold, the point below which a VAT-registered business can choose to deregister, is lower at £88,000.

No. Registration is entirely voluntary below the threshold. Many freelancers, sole traders, and small limited companies choose to stay unregistered so they can keep prices lower for VAT-exempt or non-VAT-registered clients, and to avoid the extra admin of quarterly VAT returns and Making Tax Digital record-keeping. If you are not VAT-registered, you should not be adding VAT to your invoices at all, doing so without a valid VAT registration number is not permitted.

Yes, in some cases. If most of your clients are VAT-registered businesses, they can reclaim the VAT you charge them, so registering voluntarily doesn't cost them anything while letting you reclaim VAT on your own business purchases and expenses. It also signals a certain scale to some clients. The trade-off is quarterly VAT return admin and the risk of looking more expensive to VAT-exempt or non-business clients who cannot reclaim the VAT you add.

The Flat Rate Scheme is an alternative way for smaller VAT-registered businesses (generally with turnover under £150,000) to pay VAT to HMRC as a fixed percentage of gross turnover, rather than working out the exact difference between VAT charged and VAT reclaimed on every transaction. The percentage varies by trade sector. It can simplify record-keeping but isn't always the cheaper option, particularly if you have significant reclaimable input VAT on purchases. This calculator covers standard VAT add/remove arithmetic only; work out your specific Flat Rate Scheme position separately or with an accountant.

If you're VAT-registered, every invoice you issue should show the net amount, the VAT rate applied, the VAT amount, and the gross total, along with your VAT registration number. Most contractor clients are themselves VAT-registered businesses, so they typically reclaim the VAT you charge them, meaning your day rate is effectively unaffected by VAT from their perspective even though the invoice total is higher. If you're inside IR35, note that VAT is a separate question from the IR35 status of the engagement itself, VAT applies to the value of your services regardless of how the income is ultimately taxed.

No. This tool covers straightforward UK domestic VAT add/remove arithmetic at the standard, reduced, zero, or a custom rate. Import VAT, reverse charge rules for cross-border B2B services, and the different treatment of digital services sold to consumers in other countries all follow separate rules outside the scope of this calculator.