Last verified: 12 October 2026 • Based on HMRC-published rates 2026/27
How much is VAT in the UK?
The standard rate of Value Added Tax (VAT) in the UK is 20%. To add VAT to an exclusive price of £100, multiply by 0.20 to get £20 VAT, making the gross price £120.00. To remove VAT from an inclusive price of £120, divide by 1.20 (or multiply by 1/6th) to find the net price of £100.00 and the £20 VAT element. Reduced rates of 5% apply to home energy, and 0% (zero rate) applies to most food and children’s clothing.
UK VAT Rates & Thresholds (2026/27)
- Standard Rate (20%): Applies to most goods and professional commercial services.
- Reduced Rate (5%): Domestic gas and electricity, child car seats, mobility aids.
- Zero Rate (0%): Staple grocery food, books, newspapers, sanitary products, children’s clothes.
- Exempt: Financial transactions, insurance, postal services, health, education.
- Mandatory Registration Threshold: £90,000 rolling 12-month taxable turnover. Deregistration at £88,000.
How to Calculate 20% VAT: Adding vs Removing
One of the most frequent accounting traps is trying to remove VAT by subtracting 20% from the gross amount. Subtracting 20% from £120 yields £96.00 (which is completely wrong). Because VAT was added to the base £100, the VAT portion of any gross price is exactly one-sixth (16.67%) of the total.
Worked Examples of VAT Calculations
| Calculation Type | Starting Amount | Formula Used | VAT Element | Final Amount |
|---|---|---|---|---|
| Add 20% VAT | £100.00 (Net) | £100 × 1.20 | +£20.00 | £120.00 (Gross) |
| Remove 20% VAT | £120.00 (Gross) | £120 ÷ 1.20 | -£20.00 (1/6th) | £100.00 (Net) |
| Add 5% Reduced VAT | £200.00 (Net) | £200 × 1.05 | +£10.00 | £210.00 (Gross) |
Need Instant VAT Figures?
Use our fast, penny-accurate calculator to add or strip 20%, 5%, or custom VAT rates.
Frequently Asked Questions: How Much Is VAT?
What is the standard VAT rate in the UK?
The standard rate of VAT in the UK is 20%. It applies to the vast majority of goods and professional services unless they qualify for a reduced rate, zero rate, or exemption.
How do you add 20% VAT to a price?
To add 20% VAT, multiply the net price by 1.20 (or calculate 20% by multiplying by 0.20 and add it). For example, £50 × 1.20 = £60 gross (£10 VAT).
How do you remove 20% VAT from a gross price?
To remove 20% VAT, divide the gross price by 1.20. For example, £120 ÷ 1.20 = £100 net price. The VAT element is £20, which is exactly one-sixth (1/6) of the gross figure.
What items have 5% reduced VAT?
Items charged at 5% reduced VAT include domestic fuel and power (gas and electricity in homes), children’s car seats, mobility aids for older people, and qualifying energy-saving materials.
What items are zero-rated for VAT (0%)?
Zero-rated goods include most grocery foods, baby clothes and footwear, printed and digital books, newspapers, magazines, prescription medicines, and motorcycle helmets.
What is the difference between zero-rated and exempt?
With zero-rated sales, the VAT rate is 0% and businesses can reclaim input VAT paid on their own business expenses. With exempt sales (like banking, health, or education), no VAT is charged, but businesses cannot reclaim input VAT incurred.
When must a business register for VAT in 2026/27?
You must register for VAT if your rolling 12-month VAT-taxable turnover exceeds £90,000, or if you expect your turnover to exceed £90,000 in the next 30 days alone.
Can you register for VAT voluntarily below £90,000?
Yes. If your turnover is below £90,000, you can register voluntarily to reclaim input VAT paid on business equipment and supplies, provided you make taxable business supplies.
How much is VAT on £1,000?
If £1,000 is ex-VAT, adding 20% gives £200 VAT (£1,200 total). If £1,000 is inc-VAT, dividing by 1.20 gives £833.33 net pay and £166.67 VAT element (1/6th).
Do charities pay VAT in the UK?
Charities must pay VAT on most goods and services they purchase, though specific statutory reliefs exist for medical supplies, lifeboats, and advertising for fundraising.