How to Calculate VAT in the UK 2026 — Guide & Calculator

VAT (Value Added Tax) is a consumption tax charged on most goods and services sold in the United Kingdom. Whether you run a business registered for VAT with HMRC or simply want to check a receipt, knowing how to work out VAT quickly is essential.

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UK VAT rates in 2026

20 % — standard rate (most goods and services)
5 % — reduced rate (domestic fuel, children's car seats, some energy-saving materials)
0 % — zero-rated (most food, children's clothing, books, newspapers)
Exempt — insurance, postage stamps, most financial services (different from zero-rated)

Adding VAT to a net price

Gross = Net × (1 + VAT rate)

Example: a service invoiced at £400 net at the standard 20 % rate: 400 × 1.20 = £480.00 gross, with £80 of VAT.

Extracting VAT from a gross price

Net = Gross ÷ (1 + VAT rate)

Example: an invoice of £1,200 including 20 % VAT: 1,200 ÷ 1.20 = £1,000.00 net, VAT = £200.00. A quick shortcut for the standard rate is: VAT = Gross ÷ 6.

Worked examples

Net	Rate	VAT	Gross
£100.00	20 %	£20.00	£120.00
£100.00	5 %	£5.00	£105.00
£100.00	0 %	£0.00	£100.00

VAT registration threshold

Businesses must register for VAT with HMRC once taxable turnover exceeds the annual threshold (£90,000 from April 2024, subject to change — check gov.uk for the current figure). Voluntary registration below the threshold is also possible if it benefits your business.

Practical tip

The most common mistake is dividing a gross figure by 0.80 to remove 20 % VAT — that's wrong. You must divide by 1.20, or equivalently subtract Gross ÷ 6. Our calculator handles both directions automatically.

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Disclaimer: informational only. For filings and reclaimable VAT rules, refer to HMRC guidance or a qualified accountant.