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2026/27 Rates

UK VAT Calculator: Add or Remove VAT (2026/27 Rates)

Instantly add or remove VAT for invoices and tax returns. The current Standard Rate is 20%. Use this tool to calculate the VAT content of a gross figure (removing VAT) or the final price of a net figure (adding VAT).

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Source: GOV.UK VAT Rates

How to work out VAT (and the 1/6 shortcut)

The tool does it instantly, but the maths is worth knowing for checking invoices. To add Value Added Tax: A consumption tax added to most goods and services - standard rate 20% in the UK. Businesses above the £90,000 turnover threshold must register, charge it, and pass it to HMRC. at 20%, multiply the net figure by 1.2, so £100 becomes £120. To remove it, divide the gross by 1.2 - not minus 20%, which is the common and costly slip.

The quick way to find the VAT already inside a price is the 1/6 rule: at 20% the VAT is one-sixth of the gross. On a £120 bill the VAT is £20 (£120 ÷ 6) and the net is £100. At the 5% rate the fraction is 1/21.

Which rate applies - and the zero-versus-exempt trap

Getting the rate right matters for both your prices and what you can reclaim.

  • Standard (20%): most goods and services - electronics, consultancy, restaurant meals, petrol.
  • Reduced (5%): domestic gas and electricity, children's car seats, energy-saving materials.
  • Goods and services taxable at 0% VAT (most food, children's clothes, books). They still count as taxable supplies, so related input VAT is reclaimable - unlike exempt items. (0%): most food, children's clothing, books, newspapers, public transport.

The trap people miss: zero-rated is not the same as exempt. Zero-rated sales are still taxable supplies, so they count toward your registration threshold and you can reclaim the VAT on related costs. An Goods or services with no VAT charged and no input VAT reclaimable (insurance, postage, most financial and medical services). Different from zero-rated, which is taxable at 0%. - insurance, postage, most financial and medical services - carries no VAT and blocks you from reclaiming input VAT on related expenses.

Should you be on the Flat Rate Scheme?

This is the question the simple calculators never touch, and it changes how much VAT you actually hand over. Under the A VAT simplification for small businesses (turnover up to £150,000): you charge customers 20% but pay HMRC a fixed sector percentage of gross turnover, and generally cannot reclaim input VAT. you still charge customers the normal 20%, but you pay HMRC a fixed percentage of your gross turnover and give up reclaiming VAT on most purchases.

  • Your rate depends on your sector - roughly 4% to 14.5%. A consultant pays a different rate from a builder or a shop.
  • First-year discount: take 1 percentage point off your rate for the first year of registration.
  • Joining and leaving: you can join with VAT-taxable turnover up to £150,000 (ex-VAT) and must leave once it tops £230,000 (inc-VAT).
  • The limited cost trader trap: if your spend on goods is under 2% of turnover, or under £1,000 a year, you are forced onto a 16.5% rate - at which the scheme usually costs more than standard VAT. Service businesses with few physical costs get caught here often.
  • One reclaim exception: you can still reclaim VAT on a single capital asset costing £2,000 or more (inc-VAT), such as a computer.
Flat Rate Scheme: which percentage you pay If your spend on goods is under 2% of turnover or under £1,000 a year you are forced onto the 16.5% rate, which usually costs more than standard VAT. Otherwise you pay your sector rate of 4 to 14.5%. Either way you still charge customers 20%. Flat Rate Scheme: which rate are you on? Spend on goods under 2% of turnover, or under £1,000 a year? YES NO 16.5% flat rate "limited cost trader" - usually costs more than standard VAT Your sector rate roughly 4% to 14.5% Either way, you still charge customers 20%. Source: gov.uk (VAT Notice 733) · VAT applies UK-wide ukfinancetools.co.uk
The Flat Rate Scheme can save money - unless the limited cost trader rule forces you onto 16.5%.

So it is a real saving for some and a quiet tax rise for others. Work out your sector rate and your goods spend before opting in.

When you have to register

You must register once your taxable turnover passes £90,000 in any rolling 12-month window - not the tax year - and you then have 30 days to tell HMRC. Miss it and HMRC can backdate your registration, leaving you owing 20% on sales where you never charged it. The deregistration threshold is £88,000. The full mechanics - what counts toward the figure, and the "artificial separation" risk - are in our VAT registration trap guide.

Once registered you file digitally under Making Tax Digital: HMRC's move to digital record-keeping and quarterly updates. For Income Tax it applies to sole traders and landlords with income above set thresholds.. Weighing up how to trade? See sole trader vs limited company and the self-employed tax calculator.

Frequently Asked Questions

How do I remove VAT from a total price?

Divide the gross by 1.2 for the standard 20% rate - so £120 ÷ 1.2 = £100. This isolates the net amount; subtracting 20% instead is the usual mistake.

Does the Flat Rate Scheme actually save money?

Sometimes. You pay a fixed sector percentage (about 4% to 14.5%) of gross turnover instead of normal VAT accounting. But if your goods spend is under 2% of turnover or under £1,000 a year, you are forced onto the 16.5% limited cost trader rate, which usually costs more. Check your sector rate and goods spend first.

Do zero-rated sales count toward the £90,000 threshold?

Yes. Zero-rated sales (most food, books, public transport) are still taxable supplies, so they count toward the VAT registration threshold. Only exempt sales such as insurance or postage are left out.