VAT calculator

How to work out VAT

VAT (Value Added Tax) is a tax added to most goods and services sold in the UK. The standard rate is 20%, with a reduced rate of 5% on things like domestic fuel and children’s car seats, and a zero rate on most food, books and children’s clothing. To add VAT to a net (VAT-exclusive) price, multiply it by 1.20. To remove VAT from a gross (VAT-inclusive) price, divide it by 1.20 — not by 0.80, which is a common and costly mistake. The calculator above does both instantly, at any rate you enter.

Net, gross and the VAT element

The net figure is the price before VAT, the gross figure is the price your customer actually pays, and the VAT element is the difference the business collects on HMRC’s behalf. If you are VAT-registered you charge VAT on your sales (output tax) and reclaim the VAT on your business purchases (input tax), then pay HMRC the difference each quarter.

When do I need to register for VAT?

You must register once your VAT-taxable turnover passes the £90,000 threshold in any rolling 12-month period, or if you expect to cross it within the next 30 days. Some businesses register voluntarily below the threshold to reclaim input tax or to look more established to customers. Our VAT registration guide explains exactly how the threshold works.

Once registered, VAT returns are filed digitally under Making Tax Digital. If that sounds like a headache, it doesn’t have to be — we prepare, check and file quarterly VAT returns for a fixed fee so nothing is missed and no penalties creep in.