The UK standard VAT rate is 20%. To add VAT to a net price, multiply by 1.20. To remove VAT from a gross price, divide by 1.20. The VAT registration threshold for 2026/27 is £90,000 of taxable turnover in any rolling 12-month period.
VAT Quick Formula
| What You Want | Formula | Example |
|---|---|---|
| Add 20% VAT to net price | Net × 1.20 | £500 × 1.20 = £600 |
| Remove 20% VAT from gross price | Gross ÷ 1.20 | £600 ÷ 1.20 = £500 |
| Calculate VAT amount (from net) | Net × 0.20 | £500 × 0.20 = £100 |
| Calculate VAT amount (from gross) | Gross ÷ 6 | £600 ÷ 6 = £100 |
| Add 5% VAT to net price | Net × 1.05 | £500 × 1.05 = £525 |
| Remove 5% VAT from gross price | Gross ÷ 1.05 | £525 ÷ 1.05 = £500 |
Add 20% VAT: Net to Gross Table
| Net Price (ex-VAT) | VAT at 20% | Gross Price (inc-VAT) |
|---|---|---|
| £10 | £2.00 | £12.00 |
| £25 | £5.00 | £30.00 |
| £50 | £10.00 | £60.00 |
| £75 | £15.00 | £90.00 |
| £100 | £20.00 | £120.00 |
| £150 | £30.00 | £180.00 |
| £200 | £40.00 | £240.00 |
| £250 | £50.00 | £300.00 |
| £300 | £60.00 | £360.00 |
| £400 | £80.00 | £480.00 |
| £500 | £100.00 | £600.00 |
| £750 | £150.00 | £900.00 |
| £1,000 | £200.00 | £1,200.00 |
| £2,000 | £400.00 | £2,400.00 |
| £5,000 | £1,000.00 | £6,000.00 |
| £10,000 | £2,000.00 | £12,000.00 |
Remove 20% VAT: Gross to Net Table
| Gross Price (inc-VAT) | VAT Amount | Net Price (ex-VAT) |
|---|---|---|
| £12 | £2.00 | £10.00 |
| £30 | £5.00 | £25.00 |
| £60 | £10.00 | £50.00 |
| £120 | £20.00 | £100.00 |
| £180 | £30.00 | £150.00 |
| £240 | £40.00 | £200.00 |
| £360 | £60.00 | £300.00 |
| £600 | £100.00 | £500.00 |
| £1,200 | £200.00 | £1,000.00 |
| £2,400 | £400.00 | £2,000.00 |
| £6,000 | £1,000.00 | £5,000.00 |
| £12,000 | £2,000.00 | £10,000.00 |
UK VAT Rates (2026/27)
| VAT Rate | Rate | Examples |
|---|---|---|
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Domestic fuel and power, children’s car seats, some energy-saving materials |
| Zero rate | 0% | Food (most), children’s clothing, books, newspapers, public transport, medicine |
| Exempt | N/A | Financial services, insurance, postage stamps, health and education |
Note: Zero-rated and exempt are different. Zero-rated businesses can reclaim VAT on purchases. Exempt businesses cannot.
VAT at 5% Reduced Rate
| Net Price (ex-VAT) | VAT at 5% | Gross Price (inc-VAT) |
|---|---|---|
| £50 | £2.50 | £52.50 |
| £100 | £5.00 | £105.00 |
| £200 | £10.00 | £210.00 |
| £500 | £25.00 | £525.00 |
| £1,000 | £50.00 | £1,050.00 |
| £2,000 | £100.00 | £2,100.00 |
VAT Registration Threshold 2026/27
| Threshold | Amount | Notes |
|---|---|---|
| Compulsory registration | £90,000 | Rolling 12-month taxable turnover |
| Deregistration threshold | £88,000 | You can deregister if turnover falls below this |
| Voluntary registration | Any | Useful if customers are VAT-registered businesses |
Once you exceed the £90,000 threshold, you have 30 days to notify HMRC and must register. Failure to register on time results in a penalty based on the VAT that should have been charged.
How VAT Returns Work
VAT-registered businesses submit VAT returns — typically quarterly — through HMRC’s Making Tax Digital (MTD) compatible software. Each return covers:
- Output VAT: VAT you charged on sales
- Input VAT: VAT you paid on business purchases
- VAT payable: Output VAT minus input VAT (or a refund if input exceeds output)
Example: A business with £50,000 in sales (inc. VAT) and £20,000 in purchases (inc. VAT):
- Output VAT: £50,000 ÷ 1.20 × 0.20 = £8,333
- Input VAT: £20,000 ÷ 1.20 × 0.20 = £3,333
- VAT payable: £8,333 − £3,333 = £5,000 due to HMRC
Common VAT Mistakes to Avoid
- Using 20% on gross to find VAT: Wrong. £120 × 20% = £24 (incorrect). Correct: £120 ÷ 6 = £20.
- Charging VAT before registering: You cannot legally charge VAT until registered.
- Mixing zero-rated and exempt: Zero-rated businesses reclaim input VAT; exempt businesses cannot.
- Missing the flat rate scheme: Small businesses with turnover under £150,000 can use HMRC’s Flat Rate Scheme, paying a fixed percentage of gross turnover instead of calculating input/output VAT separately.
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