How to remove VAT from a price (reverse VAT calculation)
To take VAT out of a VAT-inclusive (gross) price, divide by 1 plus the VAT rate. At the UK standard rate of 20% that means dividing by 1.2. The VAT is then the difference between the gross and the net figure.
The common mistake is to take 20% off the gross price. On £600 that gives £480 — £20 too low — because the 20% was originally charged on the smaller net price, not on the gross one. A quick check: at 20%, the VAT inside any gross price is always exactly one sixth of it.
| UK rate | Divide gross by | VAT share of gross | £120 gross becomes |
|---|---|---|---|
| 20% | 1.20 | 1/6 (16.67%) | £100.00 net + £20.00 VAT |
| 5% | 1.05 | 1/21 (4.76%) | £114.29 net + £5.71 VAT |
| 0% | 1.00 | none | £120.00 net, no VAT |
How to add VAT to a price
To add VAT, multiply the net price by 1 plus the rate. At 20%, £250 × 1.20 = £300, of which £50 is VAT. At the 5% reduced rate the multiplier is 1.05.
On an invoice with several lines, HMRC lets you work out VAT line by line or on the invoice total, and round to the nearest penny. The invoice tab above rounds each line, which keeps the PDF, the CSV and your accounting software in step.
How to calculate VAT without a calculator
For a quick check you only need two numbers. To add 20% VAT, move the decimal point one place to the left and double it: on £85, one tenth is £8.50, doubled is £17, so the gross price is £102. To remove 20% VAT, divide the gross price by 6: £102 ÷ 6 = £17 of VAT, leaving £85 net. At 5%, the VAT inside a gross price is one twenty-first of it.
UK VAT rates in 2026
The UK has three VAT rates and the headline rates have not changed. One temporary exception applies from 1 October 2026: domestic electricity in Great Britain is zero-rated.
Standard rate
Most goods and services, including adult clothing, electronics, alcohol, restaurant meals and most professional services.
Reduced rate
Domestic gas and other heating fuel, domestic electricity in Northern Ireland, children's car seats, mobility aids for older people, smoking cessation products and some renovations of empty homes.
Zero rate
Most food, books and newspapers, children's clothes and shoes, and public transport. Until 30 June 2027 it also covers qualifying domestic electricity in Great Britain. Zero-rated sales still count towards your VAT turnover.
Electricity is temporarily 0% in Great Britain. From 1 October 2026 to 30 June 2027, qualifying domestic electricity is zero-rated (it was 5%). The 28 October 2026 Budget extended the end date from 31 March to 30 June 2027; the 5% rate returns on 1 July 2027. Domestic gas and other fuels stay at 5%, and Northern Ireland stays at 5% for electricity. Updated 4 November 2026.
Exempt is different from zero-rated: insurance, most financial services, health care and education carry no VAT at all, and you cannot reclaim VAT on costs that relate to exempt sales. Private school fees have been standard-rated since 1 January 2025.
UK VAT threshold 2026: when you must register
You must register when your VAT-taxable turnover passes £90,000 in any rolling 12-month period — not your tax year, any 12 consecutive months — or when you expect to pass £90,000 in the next 30 days alone. You can ask to deregister if turnover falls below £88,000. Both thresholds have applied since 1 April 2024. A business with no UK establishment has no threshold and must register as soon as it makes a taxable supply in the UK.
VAT-registered businesses file returns under Making Tax Digital, usually every quarter. The return and payment are due one calendar month and seven days after the end of the period.
Flat Rate VAT Scheme: percentages and calculator
Under the Flat Rate Scheme you still charge customers the normal 20%, but you pay HMRC a fixed percentage of your VAT-inclusive turnover instead of the difference between output and input VAT. The percentage depends on your trade sector — from 4% for food retail to 14.5% for IT consultancy and accountancy.
- Limited cost business: if your spending on goods is less than 2% of turnover, or more than 2% but under £1,000 a year, you pay 16.5% whatever your sector.
- First-year discount: 1% off your rate until the day before the first anniversary of your VAT registration.
- Joining and leaving: you can join if you expect taxable turnover of £150,000 or less (excluding VAT) in the next 12 months, and must leave once VAT-inclusive turnover passes £230,000.
Open the Flat Rate Scheme tab to compare both methods on your own numbers — it includes all 54 HMRC sectors and every joining and leaving test.
Reverse charge VAT in the UK
Construction services (CIS)
Since 1 March 2021, most building and construction services reported under the Construction Industry Scheme are invoiced without VAT when both businesses are VAT-registered and the customer is not an end user or intermediary. The customer accounts for the VAT on its own return. The invoice must say that the domestic reverse charge applies and show the VAT rate and amount the customer must account for.
Services to EU businesses
Business-to-business services supplied from the UK to an EU customer are generally outside the scope of UK VAT. You invoice the net amount and the customer self-accounts in its own country. Selling goods to the EU is different: goods leaving Great Britain are exports (zero-rated with proof of export), and import VAT is due in the destination country.
Overseas suppliers selling services to UK businesses (from 1 April 2027)
Today a UK business that buys business services from abroad accounts for the VAT itself under the reverse charge. The 28 October 2026 Budget announced that from 1 April 2027 the reverse charge will apply only where the UK customer is VAT-registered. If the customer is not VAT-registered, the overseas supplier must charge and account for UK VAT instead, which may require the supplier to register for UK VAT. The legislation will be in Finance Bill 2026-27 and the detail may still change. The Reverse charge tab shows both outcomes.
Northern Ireland
Under the Windsor Framework, Northern Ireland follows EU VAT rules for goods. Businesses trading goods with the EU from Northern Ireland use an XI VAT number prefix. Services follow UK rules.
What a valid UK VAT invoice must show
A full VAT invoice must include a unique sequential invoice number, your business name, address and VAT registration number, the invoice date, the time of supply (tax point) if different, the customer's name and address, a description of each item, the quantity and price, the rate of VAT on each line, the total excluding VAT and the total VAT. Retailers may issue a simplified invoice for supplies of £250 or less including VAT. The invoice tab above checks these fields as you type.
United Kingdom VAT rates at a glance
| Rate | Type | Includes | Last checked |
|---|---|---|---|
| 20% | Standard | Most goods and services | 3 Nov 2026 · GOV.UK |
| 5% | Reduced | Domestic gas and heating fuel; domestic electricity in Northern Ireland; children's car seats | 3 Nov 2026 · GOV.UK |
| 0% | Zero | Most food, books, newspapers, children's clothes; GB domestic electricity until 30 June 2027 (5% again from 1 July 2027) | Electricity: updated 4 Nov 2026 · HMRC Brief 10 (2026), Budget 2026 |
Zero rate covers most food, books, newspapers and children's clothes, plus domestic electricity in Great Britain until 30 June 2027. Northern Ireland follows EU VAT rules for goods (XI numbers).
Frequently asked questions
How do I remove 20% VAT from a price?
Divide the price by 1.2. For example, £600 ÷ 1.2 = £500 net, so the VAT is £100. Do not take 20% off the gross price — that gives £480, which is wrong.
How do I add 20% VAT to a price?
Multiply the net price by 1.2. For example, £250 × 1.2 = £300, of which £50 is VAT.
How do I calculate VAT?
To add VAT, multiply the net price by 1 plus the rate (×1.2 at 20%). To remove VAT, divide the gross price by the same figure (÷1.2). The VAT is the difference between the two prices.
What is a reverse VAT calculator?
A reverse VAT calculator works backwards from a price that already includes VAT to find the net price and the VAT inside it. Choose ‘Remove VAT’ in the calculator above: £120 at 20% gives £100 net and £20 VAT.
What is the VAT threshold in the UK?
You must register for VAT when taxable turnover passes £90,000 in any rolling 12 months, or is expected to pass £90,000 in the next 30 days. The deregistration threshold is £88,000.
What are the UK VAT rates?
20% standard, 5% reduced (for example domestic gas and children's car seats) and 0% zero rate (most food, books and children's clothes, plus domestic electricity in Great Britain until 30 June 2027). Some supplies, such as insurance and education, are exempt.
Is there VAT on electricity in the UK?
From 1 October 2026 to 30 June 2027, qualifying domestic electricity in Great Britain is zero-rated, so a household bill carries no VAT. The 5% rate returns on 1 July 2027 unless the zero rate is extended again. Domestic gas and other heating fuel stay at 5%, Northern Ireland stays at 5% for electricity, and most businesses still pay 20% unless their use is domestic or under the de minimis limits.
Is the Flat Rate Scheme worth it?
It usually helps businesses with few VAT-bearing costs and a low sector rate. If you are a limited cost business, the 16.5% rate removes most of the benefit. Use the Flat Rate tab to compare both methods on your own figures.
Do I charge VAT to EU customers after Brexit?
For business-to-business services, usually not: you invoice the net amount and the EU customer accounts for VAT under the reverse charge. Goods sent from Great Britain to the EU are zero-rated exports, and the buyer pays import VAT.
What is the difference between zero-rated and exempt?
Zero-rated sales are taxable at 0%, count towards your VAT turnover and let you reclaim VAT on related costs. Exempt sales are outside VAT and block reclaim of the related input VAT.
Can I check if a UK VAT number is valid?
Use the free RemoveVAT VAT number checker (removevat.com/vat-number-checker/): it checks the format and HMRC's built-in checksum instantly. To confirm a number is actually registered, use GOV.UK's free ‘Check a UK VAT number’ service or VIES for EU numbers.
Sources
- GOV.UK — VAT rates on different goods and services
- GOV.UK — Register for VAT (thresholds)
- GOV.UK — Flat Rate Scheme: work out your flat rate
- HMRC — VAT Notice 733: Flat Rate Scheme
- GOV.UK — Domestic reverse charge for construction services
- GOV.UK — Check a UK VAT number
Add this calculator to your site
Free to embed — keep the credit link.
Rates and content checked against official sources on 3 November 2026 by Ahtisham Muhammad Nadeem.