How do I calculate 20% VAT on a price?

Multiply the net price by 1.20 to get the VAT-inclusive gross price. The VAT amount on its own is the gross price minus the net price. For example, a net price of £150 multiplied by 1.20 gives a gross price of £180, with £30 of VAT. This works for any figure. If you want to check your working, the VAT calculator above gives the same answer instantly.

How do I remove VAT from a VAT-inclusive price?

Divide the gross price by 1.20 to find the net amount. Do not subtract 20% from the gross price, as this gives the wrong answer. A gross price of £180 divided by 1.20 gives a net price of £150, with £30 of VAT. The subtraction method would incorrectly give £144. For the reduced 5% rate, divide by 1.05 instead.

What does VAT stand for?

VAT stands for Value Added Tax. It is a consumption tax applied to most goods and services sold in the UK. VAT-registered businesses collect it from their customers and pay it to HMRC, usually each quarter. The name reflects how the tax works in practice: each business in a supply chain pays VAT only on the value it adds, not on the full cost of what it sells.

What is the current standard VAT rate in the UK?

The standard UK VAT rate is 20%, and has been since January 2011. It applies to most goods and services unless they fall into a reduced or zero-rated category. The reduced rate of 5% applies to things like domestic energy and children's car seats. Many foods, books, and children's clothing are zero-rated, meaning VAT is charged at 0%. Some things, such as insurance and financial services, are VAT-exempt entirely.

What is the difference between VAT-inclusive and VAT-exclusive prices?

A VAT-exclusive price is the net price before VAT is added, which is what a business charges for its goods or services. A VAT-inclusive price is the gross price the customer actually pays, with VAT already included. The law requires consumer-facing prices to include VAT. Business-to-business prices are often shown exclusive of VAT with the VAT amount stated separately on the invoice.

What items are zero-rated for VAT in the UK?

Zero-rated goods carry VAT at 0%. They include most food and non-alcoholic drinks sold in shops, children's clothing and footwear, books and newspapers, prescription medicines, and most public passenger transport. Because these sales are still technically VAT-taxable, businesses selling zero-rated goods can reclaim the VAT they paid on their purchases, which is an important distinction from VAT-exempt sales.

What is the difference between zero-rated and VAT-exempt goods?

Zero-rated goods carry VAT at 0%, and businesses selling them can still reclaim input VAT on their costs. VAT-exempt goods and services fall outside the VAT system entirely. Businesses making only exempt sales cannot register for VAT and cannot reclaim any input VAT. Common exempt categories include insurance, financial services, education, and residential property. A business selling a mix of exempt and taxable supplies may only be able to reclaim a proportion of its input VAT.

How do I show VAT correctly on an invoice?

A valid VAT invoice must include your VAT registration number, the invoice date, a unique invoice number, your business name and address, the customer's name and address, a description of the goods or services, the net amount, the VAT rate, the VAT amount, and the gross total. Invoices under £250 can use a simplified format. HMRC can refuse input VAT claims if the invoice does not meet these requirements.

UK VAT Calculator

Add or remove VAT at any UK rate. Results update as you type. Share your calculation with a link.

Amount

Enter the amount you want to calculate VAT on

Mode

Add VAT Remove VAT

VAT rate

20% Standard 5% Reduced 0% Zero

Net amount

£0.00

Excluding VAT

VAT amount

£0.00

VAT only

Gross amount

£0.00

Including VAT

How to use this calculator

1 Enter the amount you want to calculate VAT on, in pounds and pence.
2 Choose whether you want to add VAT to a net price or remove VAT from a gross price, then select the rate: 20%, 5%, or 0%.
3 Read your three results instantly: the net amount (before VAT), the VAT amount, and the gross amount (including VAT).

How VAT calculations work

Adding VAT is straightforward once you know the method. For the standard 20% rate, you multiply your net price by 1.20. So a product priced at £200 before VAT becomes £240 including VAT, with £40 going to HMRC. For the reduced 5% rate, you multiply by 1.05 instead. This works for any amount, any rate, with no rounding errors.

Removing VAT trips up a lot of business owners. The instinct is to subtract 20% from the gross price, but this gives the wrong answer. If you subtract 20% from £120, you get £96, not £100. The correct method is to divide by 1.20. That gives you £100 exactly, because the VAT was calculated on the net price, not the gross. For 5% VAT, divide by 1.05. The calculator above does both calculations for you.

Formula

Adding VAT:   Net amount × (1 + VAT rate) = Gross amount
Removing VAT: Gross amount ÷ (1 + VAT rate) = Net amount

For 20% VAT the multiplier is 1.20; for 5% it is 1.05. Dividing by the same factor extracts VAT from a gross price — never subtract the percentage directly from the gross.

Adding 20% VAT to £250

1
Net price £250.00
2
Gross price (£250 × 1.20) £300.00
3
VAT element (£300 − £250) £50.00 ✓

Removing 20% VAT from £250

1
Gross price £250.00
2
Net price (£250 ÷ 1.20) £208.33
3
VAT element (£250 − £208.33) £41.67 ✓

Our VAT calculators

Free tools covering the VAT calculations UK businesses actually need.

What is VAT?

VAT, or Value Added Tax, is a consumption tax that VAT-registered businesses collect on behalf of HMRC. When a VAT-registered business sells goods or services, it charges VAT on top of its prices and passes that money to the government, usually every quarter. Businesses can also reclaim VAT they have paid on their own purchases, so in practice they pay VAT only on the value they add. The end consumer bears the final cost.

The UK has three VAT rates. The standard rate is 20%, which applies to most goods and services, from accountancy fees to clothing. The reduced rate of 5% covers specific categories, including domestic fuel and power, children's car seats, and certain energy-saving materials. Zero rate applies to goods where VAT is charged at 0%, including most food, children's clothing, books, and public transport. Zero-rated is different from VAT-exempt, and the distinction matters for VAT returns.

Any business whose VAT-taxable turnover exceeds £90,000 in any rolling 12-month period must register for VAT with HMRC. This threshold applies for the 2025/26 tax year. You do not have to wait until you hit the limit — many smaller businesses choose to register voluntarily, which lets them reclaim VAT on purchases and can make them appear larger and more established to clients. The deregistration threshold sits at £88,000, so if your turnover drops below that level you may be able to deregister.

Frequently asked questions

How do I calculate 20% VAT on a price?: Multiply the net price by 1.20 to get the VAT-inclusive gross price. The VAT amount on its own is the gross price minus the net price. For example, a net price of £150 multiplied by 1.20 gives a gross price of £180, with £30 of VAT. This works for any figure. If you want to check your working, the VAT calculator above gives the same answer instantly.
How do I remove VAT from a VAT-inclusive price?: Divide the gross price by 1.20 to find the net amount. Do not subtract 20% from the gross price, as this gives the wrong answer. A gross price of £180 divided by 1.20 gives a net price of £150, with £30 of VAT. The subtraction method would incorrectly give £144. For the reduced 5% rate, divide by 1.05 instead.
What does VAT stand for?: VAT stands for Value Added Tax. It is a consumption tax applied to most goods and services sold in the UK. VAT-registered businesses collect it from their customers and pay it to HMRC, usually each quarter. The name reflects how the tax works in practice: each business in a supply chain pays VAT only on the value it adds, not on the full cost of what it sells.
What is the current standard VAT rate in the UK?: The standard UK VAT rate is 20%, and has been since January 2011. It applies to most goods and services unless they fall into a reduced or zero-rated category. The reduced rate of 5% applies to things like domestic energy and children's car seats. Many foods, books, and children's clothing are zero-rated, meaning VAT is charged at 0%. Some things, such as insurance and financial services, are VAT-exempt entirely.
What is the difference between VAT-inclusive and VAT-exclusive prices?: A VAT-exclusive price is the net price before VAT is added, which is what a business charges for its goods or services. A VAT-inclusive price is the gross price the customer actually pays, with VAT already included. The law requires consumer-facing prices to include VAT. Business-to-business prices are often shown exclusive of VAT with the VAT amount stated separately on the invoice.
What items are zero-rated for VAT in the UK?: Zero-rated goods carry VAT at 0%. They include most food and non-alcoholic drinks sold in shops, children's clothing and footwear, books and newspapers, prescription medicines, and most public passenger transport. Because these sales are still technically VAT-taxable, businesses selling zero-rated goods can reclaim the VAT they paid on their purchases, which is an important distinction from VAT-exempt sales.
What is the difference between zero-rated and VAT-exempt goods?: Zero-rated goods carry VAT at 0%, and businesses selling them can still reclaim input VAT on their costs. VAT-exempt goods and services fall outside the VAT system entirely. Businesses making only exempt sales cannot register for VAT and cannot reclaim any input VAT. Common exempt categories include insurance, financial services, education, and residential property. A business selling a mix of exempt and taxable supplies may only be able to reclaim a proportion of its input VAT.
How do I show VAT correctly on an invoice?: A valid VAT invoice must include your VAT registration number, the invoice date, a unique invoice number, your business name and address, the customer's name and address, a description of the goods or services, the net amount, the VAT rate, the VAT amount, and the gross total. Invoices under £250 can use a simplified format. HMRC can refuse input VAT claims if the invoice does not meet these requirements.

Common VAT mistakes

Small errors in VAT calculations cost UK businesses real money, and most of them are surprisingly easy to avoid.

Calculating reverse VAT by subtracting instead of dividing

The most common reverse VAT error happens on expense claims and purchase invoices. A business receives a £360 hotel bill, wants to separate the VAT for its records, and subtracts 20% to get £72. Wrong. The actual VAT is £60, and the net is £300. Multiply that error across every quarterly expense claim and the input VAT figures submitted to HMRC are consistently wrong. The correct method is always to divide the gross by 1.20 for standard rate, or by 1.05 for the reduced rate.

Charging the wrong VAT rate

The financial consequence of misclassifying a product is not just a wrong number on an invoice. Apply the standard 20% rate to goods that should be zero-rated and your customers are overpaying tax they cannot reclaim. More costly still: classify a zero-rated product as VAT-exempt by mistake and you lose the right to reclaim input VAT on all the costs that relate to it. Exempt status removes you from the VAT system for those supplies entirely, which sounds simpler but costs money. If you are unsure of your product's correct classification, HMRC's VAT Notice 700 is the reference, and the VAT helpline can confirm specific cases.

Confusing turnover with profit

The £90,000 VAT registration threshold applies to your total taxable turnover, not your profit. A sole trader who invoices £95,000 over 12 months must register even if costs leave them with only £20,000 take-home. Many self-employed people catch the threshold without realising it, because they compare the figure to what they earn rather than what they bill. Total invoice value is what counts.

Missing the 30-day VAT registration rule

Most people know the backward-looking rule: register if your last 12 months of turnover exceeded £90,000. There is a second rule. If you have reasonable grounds to believe your next 30 days alone will take you over £90,000, you must register immediately, even if your historical turnover is low. One large contract can trigger this. A consultant signing a £100,000 contract in January must register before the work starts, not after year-end. Missing this rule means late registration penalties on top of the VAT already owed.

Reclaiming VAT without a valid VAT invoice

HMRC can and does refuse input VAT claims where the supporting document is not a valid VAT invoice. Card terminal receipts, informal quotes, and pro-forma invoices do not qualify, regardless of the amount. Many businesses find this out when a VAT inspection rejects a quarter's worth of input tax claims because the paperwork does not meet the standard. The invoice requirements are set out in the FAQ above. If you are buying regularly from a supplier and taking a receipt rather than a VAT invoice, ask them to issue a proper invoice instead.

Forgetting that zero-rated sales count towards the threshold

A common misreading of the rules: if you sell only zero-rated goods, such as fresh food, children's books, or exported products, your sales still count towards the £90,000 registration threshold even though you charge 0% VAT. The threshold tracks taxable turnover, which includes zero-rated supplies. Only VAT-exempt sales fall outside the calculation. A farm shop selling nothing but unprocessed food could still be legally required to register, even though none of its sales carry a VAT charge.

Filing late because you cannot pay

Some businesses delay filing their VAT return because they cannot afford to pay the bill. This doubles the problem. HMRC issues separate penalties for late filing and late payment, so missing the submission deadline adds a financial hit on top of the one you were already trying to avoid. Filing on time, even when you cannot pay, removes one of those penalties entirely. Once you have submitted, call HMRC's business payment support service to arrange a time-to-pay agreement. HMRC is generally willing to agree payment plans for businesses that make contact proactively.

VAT rates in the UK explained

The three-rate structure is straightforward on paper, but the edges of the classification system produce some genuinely odd results that have real consequences for businesses getting their rates wrong.

When the correct rate for your product is not obvious, HMRC's VAT Notice 700/1 is the starting point.

Partial exemption applies to businesses making a mixture of taxable and VAT-exempt supplies. Because exempt sales fall outside the VAT system, you cannot automatically reclaim all the input VAT on costs that relate to those supplies. Instead, you apportion it, typically based on the ratio of taxable to exempt turnover. The de minimis rule offers some relief: if your irrecoverable exempt input VAT comes to no more than £625 per month on average and represents no more than 50% of your total input VAT, you can treat it as fully recoverable. For businesses that span taxable and exempt activities, such as a financial services firm that also sells training, getting the partial exemption calculation wrong is a recurring source of HMRC disputes. If your business has any mix of taxable and exempt income, professional advice is worth the cost.

VAT rates around the world

The UK's 20% standard VAT rate sits close to the average for developed economies, but registration thresholds, collection methods, and rate structures differ sharply from one country to the next.

United Kingdom

VAT Rate

20%

Threshold

£90,000

Notes

Highest registration threshold in the developed world by a significant margin, giving UK sole traders and small businesses considerably more headroom before VAT obligations begin than their EU counterparts.

United States

VAT Rate

No federal VAT (sales tax 0–10.25% by state)

Threshold

Varies by state

Notes

Sales tax is charged at point of sale by retailers only, unlike VAT which is collected and offset at every stage of the supply chain. Businesses selling into multiple states face a patchwork of separate registration obligations.

Germany

VAT Rate

19%

Threshold

€25,000 (approx. £21,000)

Notes

Two-tier threshold: businesses below €25,000 in the prior year and forecast under €100,000 in the current year qualify for the small business exemption. One of the lower standard rates in the EU.

France

VAT Rate

20%

Threshold

€85,000 goods / €37,500 services (approx. £72,000 / £32,000)

Notes

Separate thresholds for goods and services catch out many UK businesses expanding into France, particularly those in professional services.

Ireland

VAT Rate

23%

Threshold

€85,000 goods / €42,500 services (approx. £72,000 / £36,000)

Notes

Highest standard VAT rate in the English-speaking world. The goods threshold matches France; the services threshold is higher, making it comparatively easier for UK service exporters to stay below it.

Netherlands

VAT Rate

21%

Threshold

No general threshold (mandatory registration)

Notes

No small business exemption for VAT. An optional small business scheme for those under €20,000 exists but requires an active application. The default is mandatory registration from the first taxable supply.

Spain

VAT Rate

21%

Threshold

No threshold (mandatory registration)

Notes

Every self-employed person conducting taxable economic activities must register from their first invoice. No turnover-based exemption exists, making Spain one of the most demanding VAT environments for micro-businesses.

Italy

VAT Rate

22%

Threshold

€85,000 (approx. £72,000)

Notes

A flat-rate substitute tax regime covers very small businesses below the threshold, with tax at 15% (5% for new businesses) replacing both standard income tax and VAT.

Sweden

VAT Rate

25%

Threshold

SEK 120,000 (approx. £9,000)

Notes

Joint highest standard rate in the EU alongside Denmark, Croatia, and Norway. The low registration threshold means most active Swedish businesses are VAT-registered regardless of size.

Hungary

VAT Rate

27%

Threshold

HUF 18,000,000 (approx. £38,000)

Notes

Highest VAT rate in the world. The threshold is relatively generous by EU standards, but the rate makes VAT a significant cost factor for any business trading in Hungary.

Luxembourg

VAT Rate

17%

Threshold

€35,000 (approx. £30,000)

Notes

Lowest standard VAT rate in the EU. Historically attracted large technology companies to base their European VAT registrations here, though EU rule changes have reduced this advantage for digital services.

Switzerland

VAT Rate

8.1%

Threshold

CHF 100,000 (approx. £89,000)

Notes

Not an EU member, so Swiss VAT rules apply independently. The lowest rate of any major European economy. The threshold closely mirrors the UK's in GBP terms.

Australia

VAT Rate

GST 10%

Threshold

AUD 75,000 (approx. £37,000)

Notes

Broad-based GST with few exemptions. Fresh food, healthcare, education, and exports are GST-free. Lower than the UK threshold but considerably more generous than most of Europe.

Canada

VAT Rate

GST 5% federal + provincial taxes (combined up to 15%)

Threshold

CAD 30,000 (approx. £17,000)

Notes

Federal GST is 5%, but some provinces have harmonised their own taxes into a single HST of up to 15%. Businesses must track obligations under both systems.

United Arab Emirates

VAT Rate

VAT 5%

Threshold

AED 375,000 (approx. £79,000)

Notes

The UAE introduced VAT in 2018, one of the more recent major economies to adopt the system. Mandatory registration at AED 375,000; voluntary registration available from AED 187,500.

Singapore

VAT Rate

GST 9%

Threshold

SGD 1,000,000 (approx. £58,000)

Notes

Singapore raised its GST rate to 9% in January 2024. The SGD 1 million threshold is the most generous in this table in absolute terms, meaning the large majority of Singapore businesses trade below it.

Japan

VAT Rate

Consumption tax 10% (8% reduced for food and beverages)

Threshold

JPY 10,000,000 (approx. £51,000)

Notes

Japan's consumption tax works similarly to VAT but registration is assessed against sales from two years prior, creating a lag before fast-growing businesses must register.

India

VAT Rate

GST 18% standard (rates of 5%, 12%, 18%, 28% apply by category)

Threshold

INR 4,000,000 (approx. £37,000)

Notes

India's GST replaced a complex web of state and central taxes in 2017. Correct product classification is critical given the four-tier rate structure, and businesses file under both central and state GST frameworks.

South Africa

VAT Rate

VAT 15%

Threshold

ZAR 1,000,000 (approx. £42,000)

Notes

South Africa maintained its 15% rate after reversing a proposed increase to 15.5% in April 2025. The compulsory registration threshold rises to ZAR 2.3 million from April 2026.

Brazil

VAT Rate

Indirect taxes vary by state and federal level (effective rate approximately 17–27% depending on product and state)

Threshold

No single national threshold

Notes

No unified VAT. State-level ICMS and federal taxes apply separately, with rates and rules varying across 27 states. A national tax reform is phasing in a consolidated system through 2033.

Country	Standard VAT / GST Rate	Registration Threshold	Notes
United Kingdom	20%	£90,000	Highest registration threshold in the developed world by a significant margin, giving UK sole traders and small businesses considerably more headroom before VAT obligations begin than their EU counterparts.
United States	No federal VAT (sales tax 0–10.25% by state)	Varies by state	Sales tax is charged at point of sale by retailers only, unlike VAT which is collected and offset at every stage of the supply chain. Businesses selling into multiple states face a patchwork of separate registration obligations.
Germany	19%	€25,000 (approx. £21,000)	Two-tier threshold: businesses below €25,000 in the prior year and forecast under €100,000 in the current year qualify for the small business exemption. One of the lower standard rates in the EU.
France	20%	€85,000 goods / €37,500 services (approx. £72,000 / £32,000)	Separate thresholds for goods and services catch out many UK businesses expanding into France, particularly those in professional services.
Ireland	23%	€85,000 goods / €42,500 services (approx. £72,000 / £36,000)	Highest standard VAT rate in the English-speaking world. The goods threshold matches France; the services threshold is higher, making it comparatively easier for UK service exporters to stay below it.
Netherlands	21%	No general threshold (mandatory registration)	No small business exemption for VAT. An optional small business scheme for those under €20,000 exists but requires an active application. The default is mandatory registration from the first taxable supply.
Spain	21%	No threshold (mandatory registration)	Every self-employed person conducting taxable economic activities must register from their first invoice. No turnover-based exemption exists, making Spain one of the most demanding VAT environments for micro-businesses.
Italy	22%	€85,000 (approx. £72,000)	A flat-rate substitute tax regime covers very small businesses below the threshold, with tax at 15% (5% for new businesses) replacing both standard income tax and VAT.
Sweden	25%	SEK 120,000 (approx. £9,000)	Joint highest standard rate in the EU alongside Denmark, Croatia, and Norway. The low registration threshold means most active Swedish businesses are VAT-registered regardless of size.
Hungary	27%	HUF 18,000,000 (approx. £38,000)	Highest VAT rate in the world. The threshold is relatively generous by EU standards, but the rate makes VAT a significant cost factor for any business trading in Hungary.
Luxembourg	17%	€35,000 (approx. £30,000)	Lowest standard VAT rate in the EU. Historically attracted large technology companies to base their European VAT registrations here, though EU rule changes have reduced this advantage for digital services.
Switzerland	8.1%	CHF 100,000 (approx. £89,000)	Not an EU member, so Swiss VAT rules apply independently. The lowest rate of any major European economy. The threshold closely mirrors the UK's in GBP terms.
Australia	GST 10%	AUD 75,000 (approx. £37,000)	Broad-based GST with few exemptions. Fresh food, healthcare, education, and exports are GST-free. Lower than the UK threshold but considerably more generous than most of Europe.
Canada	GST 5% federal + provincial taxes (combined up to 15%)	CAD 30,000 (approx. £17,000)	Federal GST is 5%, but some provinces have harmonised their own taxes into a single HST of up to 15%. Businesses must track obligations under both systems.
United Arab Emirates	VAT 5%	AED 375,000 (approx. £79,000)	The UAE introduced VAT in 2018, one of the more recent major economies to adopt the system. Mandatory registration at AED 375,000; voluntary registration available from AED 187,500.
Singapore	GST 9%	SGD 1,000,000 (approx. £58,000)	Singapore raised its GST rate to 9% in January 2024. The SGD 1 million threshold is the most generous in this table in absolute terms, meaning the large majority of Singapore businesses trade below it.
Japan	Consumption tax 10% (8% reduced for food and beverages)	JPY 10,000,000 (approx. £51,000)	Japan's consumption tax works similarly to VAT but registration is assessed against sales from two years prior, creating a lag before fast-growing businesses must register.
India	GST 18% standard (rates of 5%, 12%, 18%, 28% apply by category)	INR 4,000,000 (approx. £37,000)	India's GST replaced a complex web of state and central taxes in 2017. Correct product classification is critical given the four-tier rate structure, and businesses file under both central and state GST frameworks.
South Africa	VAT 15%	ZAR 1,000,000 (approx. £42,000)	South Africa maintained its 15% rate after reversing a proposed increase to 15.5% in April 2025. The compulsory registration threshold rises to ZAR 2.3 million from April 2026.
Brazil	Indirect taxes vary by state and federal level (effective rate approximately 17–27% depending on product and state)	No single national threshold	No unified VAT. State-level ICMS and federal taxes apply separately, with rates and rules varying across 27 states. A national tax reform is phasing in a consolidated system through 2033.

The UK's £90,000 threshold stands apart internationally. Most EU member states sit between £9,000 and £72,000 in equivalent terms, and several impose mandatory registration from the first invoice. For a UK business expanding into Europe, VAT obligations can arise from a far smaller volume of sales than anything they have encountered at home.

Hungary's 27% and Sweden's 25% put the UK's 20% rate in perspective. It draws criticism domestically, but it sits well below the highest rates in comparable economies. For businesses using the VAT Flat Rate Scheme Calculator, the international picture adds another dimension: the UK's flat rate scheme is one of very few in the world that allows small businesses to simplify their VAT accounting while remaining inside the mainstream VAT system.

VAT rules and HMRC guidance

The definitive reference for UK VAT is HMRC VAT Notice 700, which covers everything from how to calculate VAT to what counts as a valid invoice and how to account for VAT correctly in your records. You can read it in full at HMRC VAT Notice 700. If you are new to VAT or have recently started charging it, this is the document to read alongside any calculator or guide. The sections are clearly numbered and easy to jump between.

For registration specifically, HMRC VAT Notice 700/1 covers who has to register, when the obligation begins, and what happens if you register late. It is available at HMRC VAT Notice 700/1. If you are unsure whether your turnover has crossed the threshold yet, the VAT Registration Threshold Calculator lets you enter your monthly figures and see your rolling 12-month total with a clear over or under indicator.