The UK standard VAT rate is 20%. The reduced rate — for domestic fuel, children's car seats, and some other goods — is 5%. Adding VAT to a net price: multiply by 1.2 (standard) or 1.05 (reduced). Removing VAT from a gross price: divide by 1.2 or 1.05, or multiply by 1/6 (standard) or 1/21 (reduced).
- Standard VAT rate: 20% — applies to most goods and services.
- Reduced VAT rate: 5% — domestic energy, children's car seats, mobility aids and some other supplies.
- Zero rate: 0% — food (most), children's clothing, books, prescriptions. Still VAT-registered, but no tax collected.
- Exempt supplies (insurance, financial services, health) are outside the VAT system; input VAT on purchases cannot be reclaimed.
- You must register for VAT when your taxable turnover for the past 12 months exceeds £90,000.
How to add and remove VAT
| Direction | Standard (20%) | Reduced (5%) |
|---|---|---|
| Add VAT to net price | Net × 1.20 | Net × 1.05 |
| Remove VAT from gross price | Gross ÷ 1.20 (or × 5/6) | Gross ÷ 1.05 (or × 20/21) |
| VAT amount (from net) | Net × 0.20 | Net × 0.05 |
| VAT amount (from gross) | Gross × 1/6 | Gross × 1/21 |
Worked example — £1,200 gross invoice at standard rate
| Item | Amount |
|---|---|
| Gross (VAT-inclusive) | £1,200.00 |
| Net (ex-VAT) = £1,200 ÷ 1.20 | £1,000.00 |
| VAT element = £1,200 × 1/6 | £200.00 |
When does the reduced 5% rate apply?
The 5% reduced rate applies to a defined list including: domestic gas and electricity, heating oil, children's car seats, mobility aids for the elderly, smoking-cessation products, and installation of energy-saving materials in residential properties (since April 2022 at 0%, then reverting to 5% after a period). If in doubt, check the gov.uk VAT rates guidance.
Frequently asked questions
What is the VAT registration threshold for 2026/27?
£90,000 of VAT-taxable turnover in any rolling 12-month period. You must register within 30 days of going over. See the full VAT registration threshold guide.
Can I reclaim VAT I paid on business purchases?
Yes, if you are VAT-registered. Input VAT (paid on purchases and expenses) is offset against output VAT (charged to customers) on your VAT return. If input VAT exceeds output VAT, HMRC repays the difference.
Does the calculator work for Scotland, Wales and Northern Ireland?
Yes. VAT is a UK-wide tax administered by HMRC; the 20%/5% rates apply across England, Scotland, Wales and Northern Ireland. Unlike Income Tax, there is no devolved VAT.