VAT Calculator
Calculate VAT amounts and convert between net and gross values
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Based on current UK VAT rates
Understanding VAT in the UK
Value Added Tax (VAT) is a consumption tax placed on goods and services in the UK. It's charged at each stage of the supply chain where value is added, from production to the point of sale.
When you're VAT registered, you must charge VAT on your sales (output tax) and can reclaim VAT on your purchases (input tax). The difference between these amounts is what you pay to or reclaim from HMRC.
UK VAT Rates Explained
The UK has three different VAT rates:
- Standard Rate (20%): Applied to most goods and services in the UK, including:
- Electronics and household appliances
- Furniture and home furnishings
- Alcoholic drinks and tobacco
- Most services including professional fees
- Reduced Rate (5%): Applied to certain goods and services, including:
- Domestic fuel and power
- Installation of energy-saving materials
- Children's car seats
- Some home renovations
- Zero Rate (0%): Applied to zero-rated goods and services, including:
- Most food items (except hot takeaway food, confectionery, etc.)
- Books and newspapers
- Children's clothes and shoes
- New residential buildings
There are also some goods and services that are exempt from VAT, such as insurance, education, and healthcare. The difference between zero-rated and exempt items is that businesses can reclaim input VAT on zero-rated items but not on exempt items.
VAT Registration and Thresholds
Businesses must register for VAT when their taxable turnover exceeds £90,000 (as of 2024/25) in a 12-month period. Once registered, businesses must:
- Charge VAT on their goods and services
- Submit VAT returns to HMRC, usually quarterly
- Pay any VAT due to HMRC
- Keep VAT records and a VAT account
Businesses can also voluntarily register for VAT even if their turnover is below the threshold, which allows them to reclaim VAT on their purchases. This can be beneficial for businesses that:
- Make significant purchases with VAT that they could reclaim
- Sell primarily to VAT-registered businesses who can reclaim the VAT
- Want to appear larger and more established
VAT Calculation Methods
Adding VAT to a Net Amount
To calculate the gross amount (including VAT) from a net amount (excluding VAT):
Gross Amount = Net Amount × (1 + VAT Rate ÷ 100)
For example, with a net amount of £100 and the standard VAT rate of 20%:
Gross Amount = £100 × (1 + 20 ÷ 100) = £100 × 1.2 = £120
Removing VAT from a Gross Amount
To calculate the net amount (excluding VAT) from a gross amount (including VAT):
Net Amount = Gross Amount ÷ (1 + VAT Rate ÷ 100)
For example, with a gross amount of £120 and the standard VAT rate of 20%:
Net Amount = £120 ÷ (1 + 20 ÷ 100) = £120 ÷ 1.2 = £100
Calculating the VAT Amount
To calculate the VAT amount from a net amount:
VAT Amount = Net Amount × (VAT Rate ÷ 100)
To calculate the VAT amount from a gross amount:
VAT Amount = Gross Amount - (Gross Amount ÷ (1 + VAT Rate ÷ 100))
Need Help with VAT?
Our team of expert accountants can provide personalized guidance for VAT registration, returns, and planning to ensure your business remains compliant and efficient.