United Kingdom VAT tools

VAT (Value Added Tax) is a consumption tax charged on most goods and services in the UK. The standard rate is 20%, with a reduced 5% rate on some items such as domestic energy and a zero rate on categories like most food and children's clothing. Businesses registered for VAT add it to their prices, collect it from customers, and pass it to HMRC, reclaiming the VAT they themselves paid on purchases.

You must register for VAT once your taxable turnover passes the registration threshold, though you can register voluntarily below it. Once registered, you charge VAT on your sales, show it as a separate line on invoices, and file regular VAT returns.

Two everyday calculations trip people up. Adding VAT starts from a net price and multiplies by 1.20 to reach the gross price a customer pays. Removing VAT works backwards from a gross, VAT-inclusive total to find the net figure and the VAT portion inside it — you divide by 1.20, not subtract 20%.

Getting the direction right matters for pricing and for invoices. The VAT calculator and the invoice-VAT and reverse-VAT workflow pages walk through each direction so the numbers on your quote and your VAT return agree.

A percentage calculation cannot decide whether a supply is standard-rated, reduced-rated, zero-rated, exempt, or outside the scope of UK VAT. It also cannot determine the place of supply for an overseas customer, whether the reverse charge applies, or whether a mixed invoice needs more than one rate. Those are classification questions, not arithmetic questions.

Use the calculator only after you know the correct VAT treatment. Check HMRC guidance when the customer or supplier is outside the UK, the sale involves digital services, construction, imports, second-hand goods, or partial exemption, or the invoice includes several types of supply. Keep the rate and reasoning with the invoice record so the gross total can be traced back to the correct rule.