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Choose Add VAT if your figure excludes VAT, or Remove VAT if it already includes VAT.
Enter the amount in pounds and pence. For Remove VAT, enter the price including VAT.
Pick the rate: 20% standard, 5% reduced, 0% zero, or a custom rate for other countries.
Read the breakdown: net amount, VAT amount and gross amount. Use Copy results to paste them into an invoice or spreadsheet.
Multiply the net price by 1 plus the VAT rate.
Example: £850 × 1.20 = £1,020. The VAT is £170.
Divide the gross price by 1 plus the VAT rate.
Example: £1,020 ÷ 1.20 = £850. The VAT is £170.
Divide the VAT by the rate to get the net figure.
Example: £170 ÷ 0.20 = £850 net, so the gross is £1,020.
Do not take 20% off a gross price to remove VAT. £1,020 minus 20% gives £816, which is wrong. VAT was charged on the net price, so you must divide by 1.20.
The VAT fraction tells you how much of a VAT-inclusive price is VAT.
| VAT rate | VAT fraction | Example: VAT in £120 |
|---|---|---|
| 20% | 1/6 | £120 ÷ 6 = £20 |
| 5% | 1/21 | £105 ÷ 21 = £5 (on a £105 price) |
At 20%, one sixth of any gross amount is VAT. This is the quickest way to check a receipt or invoice by hand.
| Rate | % | Common examples |
|---|---|---|
| Standard | 20% | Most goods and services, including professional services, adult clothing, electronics and restaurant meals |
| Reduced | 5% | Domestic fuel and power, children's car seats, mobility aids for older people, some energy-saving materials |
| Zero | 0% | Most food, books and newspapers, children's clothes and shoes, public transport |
| Exempt | No VAT | Insurance, most financial services, education, health services, residential rent, postage stamps |
Both mean no VAT is charged to the customer. The difference is on the seller's side. Zero-rated sales count towards your VAT turnover and you can reclaim VAT on related costs. Exempt sales do not count towards VAT turnover, and you usually cannot reclaim VAT on costs linked to them.
The VAT registration threshold is £90,000 of taxable turnover. It has been unchanged since April 2024 and stays the same for 2026/27. The deregistration threshold is £88,000.
Rolling 12 months: check your taxable turnover at the end of every month for the previous 12 months. The test is not based on your tax year or accounting year.
When to register: tell HMRC within 30 days of the end of the month in which you went over £90,000. Your registration normally takes effect from the first day of the second month after you crossed it.
Forward look: you must also register straight away if you expect taxable turnover to go over £90,000 in the next 30 days alone.
Voluntary registration: you can register below £90,000. It often makes sense if your customers are VAT-registered businesses or you have high VATable costs.
| Scheme | Who can join | What changes |
|---|---|---|
| Flat Rate Scheme | VAT taxable turnover up to £150,000 (excluding VAT) | You pay HMRC a fixed percentage of gross turnover instead of working out output tax minus input tax |
| Cash Accounting Scheme | VAT taxable turnover up to £1.35 million | You account for VAT when you are paid and when you pay suppliers, not on invoice dates |
| Annual Accounting Scheme | VAT taxable turnover up to £1.35 million | One VAT return a year, with interim payments |
The calculator works out the VAT on a sale or purchase. It does not calculate Flat Rate Scheme payments.
All VAT-registered businesses must keep digital VAT records and file VAT returns through MTD-compatible software. This has applied to every VAT-registered business since April 2022, whatever its turnover. To check whether MTD for Income Tax applies to a sole trader or landlord, use our MTD Calculator.
AcoBloom prepares VAT returns for UK accounting firms, from bookkeeping and reconciliations to MTD-ready submissions for your review.
Divide the VAT-inclusive price by 1.20. For example, £600 ÷ 1.20 = £500 net, so the VAT is £100.
Multiply the net price by 1.20. For example, £500 × 1.20 = £600 gross.
The VAT is £200 and the total including VAT is £1,200. If £1,000 already includes VAT, the net price is £833.33 and the VAT is £166.67.
Because VAT is 20% of the net price, not the gross price. At 20%, VAT is one sixth of the gross, not one fifth.
Neither is charged VAT. Zero-rated sales count towards your VAT turnover and let you reclaim VAT on costs. Exempt sales do not count and usually block VAT recovery on related costs.
No. Only VAT-registered businesses can charge VAT on their sales.
When your taxable turnover goes over £90,000 in any rolling 12-month period, or you expect it to go over £90,000 in the next 30 days alone.
HMRC generally allows the total VAT on an invoice to be rounded down to the nearest penny. Line-by-line rounding rules are in VAT Notice 700.
Yes. Choose Custom and enter the local VAT or GST rate.