What is the UK VAT rate?

The UK standard VAT rate is 20%. There is also a reduced rate of 5% (applied to items such as domestic energy and children's car seats) and a zero rate of 0% (applied to most food, children's clothing, and books). This calculator uses the 20% standard rate.

How do I add 20% VAT to a net price?

To add 20% VAT, multiply the net amount by 1.20. For example, a net price of £100 becomes £120 gross (£100 net + £20 VAT). Use the 'Add VAT' tab above and enter your net amount.

How do I remove VAT from a gross price?

To remove 20% VAT from a gross (VAT-inclusive) price, divide by 1.20. For example, a gross price of £120 has a net of £100 and VAT of £20. Use the 'Remove VAT' tab and enter the gross amount.

Who needs to charge UK VAT?

Any UK business with taxable turnover above the VAT registration threshold (£90,000 for the 2024-25 tax year) must register for VAT with HMRC and charge VAT on taxable supplies. Businesses below the threshold can register voluntarily.

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

A VAT-exclusive price (net price) does not include VAT. A VAT-inclusive price (gross price) already includes VAT. B2B pricing is typically quoted net (ex-VAT). Consumer retail pricing is typically quoted gross (inc-VAT). When invoicing another business, you should state both the net amount and the VAT amount separately.

Do I need to show VAT on my invoice?

If you are VAT-registered, yes. A VAT invoice must show your VAT registration number, the rate of VAT applied to each line item, the VAT amount charged, and the net and gross totals. Tidybill generates HMRC-compliant VAT invoices automatically.

UK VAT Calculator - Add or Remove 20% VAT

What is UK VAT?

Value Added Tax (VAT) is a consumption tax collected by VAT-registered businesses on behalf of HMRC. It is applied at each stage of the supply chain, with registered businesses reclaiming the VAT they pay on their own purchases. The end consumer ultimately bears the cost. VAT was introduced in the United Kingdom in 1973, replacing Purchase Tax, and has been administered by HMRC since the formation of the merged Revenue and Customs department in 2005.

UK VAT rates

There are three main VAT rates in the United Kingdom:

Standard rate: 20%. Applies to most goods and services, including professional fees, software, and most manufactured goods. This is the rate used in this calculator.
Reduced rate: 5%. Applies to specific items including domestic energy (gas and electricity), children's car seats, and certain residential property conversions.
Zero rate: 0%. VAT-registered businesses must still record zero-rated sales, but charge no VAT. Zero rate applies to most food, children's clothing, books, newspapers, and qualifying construction of new dwellings.

Some supplies are exempt from VAT entirely, meaning VAT is not charged and the supplier cannot reclaim VAT on related costs. Exempt supplies include most financial services, insurance, education provided by eligible bodies, and most healthcare. Exempt differs from zero-rated: zero-rated businesses can reclaim input VAT; exempt businesses generally cannot.

When must you register for VAT?

You must register for VAT with HMRC if your taxable turnover exceeds the registration threshold in any rolling 12-month period. The threshold for 2024-25 is £90,000. Once registered, you must charge VAT on all standard and reduced-rated supplies, file VAT returns (usually quarterly), and pay any VAT due to HMRC.

You can also register voluntarily if your turnover is below the threshold. This can be beneficial if your customers are mainly other VAT-registered businesses (since they can reclaim the VAT you charge), or if you have significant VAT costs you wish to reclaim. The deregistration threshold is £88,000 - if your taxable turnover falls below this, you can apply to deregister.

How to add VAT to a net amount

To add 20% VAT to a net (ex-VAT) price, multiply the net amount by 1.20. The formula is:

Gross = Net x 1.20
VAT amount = Net x 0.20

For example: a net price of £500 becomes £600 gross, with £100 of VAT included.

How to remove VAT from a gross amount

To extract VAT from a gross (VAT-inclusive) price, divide by 1.20. The formula is:

Net = Gross / 1.20
VAT amount = Gross - Net

For example: a gross price of £600 has a net of £500 and contains £100 of VAT.

What must a UK VAT invoice show?

If you are VAT-registered, your invoices must include the following mandatory fields under HMRC rules:

A unique sequential invoice number
Your name and address
Your VAT registration number
The tax point (the date the supply takes place)
Your customer's name and address
A description of the goods or services supplied
The quantity of each item
The unit price, net total, and VAT rate for each line
The total VAT charged

Tidybill generates VAT invoices that include all of these fields automatically. See the full guide to UK VAT invoice requirements.

Making Tax Digital for VAT

Since April 2022, all VAT-registered businesses in the UK must comply with Making Tax Digital (MTD) for VAT. This requires keeping digital records of VAT transactions and submitting VAT returns using compatible software. Tidybill keeps digital records of all your VAT invoices and exports VAT figures in a format compatible with MTD bridging software. Read more about MTD for VAT.

Using this calculator for invoicing

This calculator is intended as a quick reference tool. For ongoing invoicing, Tidybill automatically applies the correct VAT rate to each line item on your invoices, calculates the VAT total, and produces compliant VAT invoices. You can set default VAT rates, mix rates on a single invoice, and export VAT figures for your returns. See Tidybill pricing - free plan available.

UK VAT Calculator

Calculate VAT