How do I calculate 20% VAT in the UK?

To add 20% VAT to a net price, multiply by 1.20. For example, £100 + VAT = £120. To remove VAT from a gross price, divide by 1.20. For example, £120 gross = £100 net + £20 VAT.

What is the UK VAT rate for 2026/27?

The standard UK VAT rate is 20% for 2026/27. A reduced rate of 5% applies to certain goods and services such as domestic fuel and children's car seats. Some items are zero-rated (0%) including most food, children's clothing, and books.

How do I work out VAT backwards from a gross amount?

To calculate reverse VAT, divide the gross amount by (1 + VAT rate). At 20%, divide by 1.20. For example, £240 gross ÷ 1.20 = £200 net. The VAT amount is £40. This is also called 'gross to net' or 'removing VAT'.

Do I need to register for VAT?

You must register for VAT if your taxable turnover exceeds £85,000 in any 12-month period (the VAT threshold for 2026/27). You can also register voluntarily if your turnover is below this, which may be beneficial if you have significant VAT-able expenses to reclaim.

UK VAT Calculator 2026/27

Instantly add VAT, remove VAT from a gross price, or calculate reverse VAT. Supports standard (20%), reduced (5%), and zero-rated (0%) goods. Updated for the current tax year.

🧮 Calculate VAT

Net Amount (before VAT)

Enter the price before VAT is added.

VAT Rate

Most goods and services use the 20% standard rate.

Custom VAT Rate

📊 Result

Total Including VAT

£0.00

20% VAT added

Note: Calculations use the 2026/27 UK VAT rates. Standard rate is 20%, reduced rate is 5%, zero rate is 0%. Always verify with HMRC if your goods qualify for reduced or zero rating.

UK VAT Rates for 2026/27

Rate	Percentage	Applies To
Standard	20%	Most goods and services (electronics, consultancy, construction, software)
Reduced	5%	Domestic fuel, children's car seats, sanitary products, energy-saving materials
Zero	0%	Most food, children's clothing, books, newspapers, public transport
Exempt	—	Insurance, postal services, health care, education, betting

Exempt vs Zero-Rated: Zero-rated items still count as "taxable" for VAT registration purposes (they add to your turnover). Exempt items do not count toward the £85,000 threshold and you cannot reclaim VAT on costs related to them.

How to Calculate VAT: Three Methods

1. Add VAT (Net → Gross)

You have a net price and want to know the total including VAT. Multiply the net amount by (1 + VAT rate).

Gross = Net × 1.20 (for 20% VAT)

Example: £250 net × 1.20 = £300 gross (£50 VAT)

2. Remove VAT (Gross → Net)

You have a gross price and want to extract the VAT amount and the net price. Divide the gross amount by (1 + VAT rate).

Net = Gross ÷ 1.20 (for 20% VAT)

Example: £300 gross ÷ 1.20 = £250 net (£50 VAT)

3. Reverse VAT (Work Backwards)

The same as "remove VAT" — useful when you only know the total paid and need to find the original price and tax component. This is essential for checking supplier invoices or reclaiming VAT on expenses.

At 20%: multiply the gross by 0.1667 (or 1/6) to get the VAT amount directly. Then subtract to get net.

When Do You Need to Register for VAT?

UK VAT registration is mandatory once your taxable turnover exceeds £85,000 in any rolling 12-month period. This threshold has been frozen since 2017 and remains at £85,000 for 2026/27.

Taxable turnover means the total value of everything you sell that is not VAT-exempt. It includes:

Standard-rated sales (20%)
Reduced-rated sales (5%)
Zero-rated sales (0%)

It does not include exempt sales (insurance, postage, health services).

Voluntary registration: Even if your turnover is below £85,000, you can register voluntarily. This is often smart if you have significant VAT-able business expenses (e.g., buying stock, equipment, paying for software) because you can reclaim the VAT you pay to suppliers.

💡 Pro Tip

If you are a limited company with £60,000 turnover and £15,000 of VAT-able expenses (software, office equipment, professional services), voluntary registration lets you reclaim £2,500 in VAT. The admin cost of filing quarterly VAT returns is usually worth it.

Frequently Asked Questions

What is the VAT fraction for 20%?

The VAT fraction is 1/6 (or 0.1667). If you have a gross amount including 20% VAT, multiply by 1/6 to get the VAT amount. For example, £120 gross × 1/6 = £20 VAT. This works because £20 is 1/6 of £120, and £100 is 5/6 of £120.

Do I charge VAT on postage?

If you charge postage and your business is VAT registered, postage is usually zero-rated if it is Royal Mail standard delivery. However, if you add a handling fee or use a courier service, that extra charge may be standard-rated (20%). Most e-commerce businesses charge 20% VAT on their total shipping fee.

What is flat rate VAT?

The Flat Rate Scheme lets small businesses pay a fixed percentage of their turnover as VAT, rather than calculating VAT on every transaction. You still charge 20% to customers, but you only pay HMRC a lower rate (e.g., 7.5% for accountancy, 12.5% for computer repair). You cannot reclaim VAT on purchases under this scheme. It is only worth it if your expenses are low.

How do I calculate VAT for a discount?

VAT is calculated on the discounted net price, not the original price. If an item is £100 with a 10% discount, the net is £90. VAT at 20% is £18, making the gross £108. If you offer a discount after VAT is added, the VAT amount must be adjusted proportionally.

Is VAT charged on labour?

Yes, labour charges by VAT-registered tradespeople are standard-rated (20%) unless the work qualifies for reduced or zero rating. For example, installing energy-saving materials may qualify for 5% VAT. New build construction is zero-rated. Always check HMRC Notice 708 for construction VAT rules.