UK VAT Calculator

What is VAT in the United Kingdom?

Value Added Tax, or VAT, is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. In the United Kingdom, most goods and services are subject to VAT. Businesses with an annual turnover exceeding the current VAT registration threshold (presently £90,000) are legally required to register with HM Revenue and Customs (HMRC) and charge VAT to their customers.

VAT is collected by businesses on behalf of the government. Registered businesses can usually reclaim the VAT they pay on business-related purchases. Our calculator simplifies this process by allowing you to work backwards from a gross amount to find the net price or forwards from a net price to include the required tax.

UK VAT Rates Explained

Standard Rate (20%): Most goods and services fall under this category.

Reduced Rate (5%): Applied to specific items like domestic fuel and power, or children's car seats.

Zero Rate (0%): Goods like most food items and children's clothes are zero-rated, meaning they are taxable but the rate is 0%.

Who Needs to Pay VAT?

VAT-registered businesses must pay VAT to HMRC based on the difference between the VAT they charge customers and the VAT they pay to suppliers. If you are not VAT-registered, you do not charge VAT, but you also cannot reclaim it on your purchases.

See also:

• Limited Company Dividend Calculator
• UK Corporation Tax Estimator