To use the VAT calculator, enter any amount in numbers and then press 'Add VAT' to add VAT to the net amount. Or 'Remove VAT' to remove VAT from the gross amount. Both calculations will show you the gross, net and VAT amount.
Got 12 mins spare? See 13 expert tips you might not know (and could save you £1,000's).
1. Mobile phone bills: You'll probably know you can expense part of your mobile phone bill if you use it for business. But did you know you can also reclaim the VAT for the business portion of use too?
2. Home office costs: If you work from home, you can also reclaim VAT on the business portion of electricity, heating, broadband, and even rent if VAT is charged.
3. Mileage: You can reclaim VAT on the business-use portion of your fuel (if you keep proper logs and receipts).
4. Professional subscriptions: Industry body memberships, trade publications, and professional insurance are all reclaimable if they relate to your business.
While you can't reclaim VAT on a car purchase (unless it's 100% for business use), you can reclaim 50% of the VAT on a car lease, even if there's private use. This is one of the few areas where HMRC gives a flat 50% without requiring you to prove exact business mileage.
This works out to roughly 1 of your 12 lease payments a year being totally free.
It's very easy during the fast-paced nature of growing a business to get VAT and working capital mixed up in the same account.
If you want to save yourself quarterly stress, transfer all the VAT to a separate account. Then when VAT return time comes you'll have it already and usually some left over (from expenses).
If you've just registered you can claim VAT back on the last 4 years of goods, and the last 6 months of service invoices. This could be a nice little bonus waiting for you.
Have your accountant review your flat rate setup regularly, or when business activities shift. You might qualify for a lower rate, or maybe it makes sense to switch to standard VAT accounting. Watch the 16.5% limited cost trader rate, if your goods cost less than 2% of turnover, you'll be stuck on this higher rate.
Did you know you can legally write off the purchase cost of commercial solar panels for corporation tax in the first year (using AIA up to £1m), and collect revenue from the SEG? This allows you to purchase panels, claim capital allowances (AIA), and potentially earn revenue from the SEG for 25 years. Many companies make considerable long term profits doing this, but works best if you have space (like a roof, or field).
A £50k equipment purchase means £10k in reclaimable VAT. If you miss the deadline you might have to wait up to 3 months to claim it back, putting extra pressure on cash flow.
Normally you owe VAT once you issue the invoice. If you switch to cash accounting you pay when you're paid. Highly advisable for slow cycle industries like manufacturing.
Paying import VAT at the border and waiting to claim it back is burning cash flow for no reason. PVA lets you account for it, and reclaim it on the same return. Net cash impact: zero.
You have to select PVA on your customs declaration. Some freight forwarders default to the old method unless you specifically ask. Always check.
You can reclaim VAT on bad debt after 6 months. Don't wait any longer to reclaim it for best cash flow optimisation.
On the Flat Rate Scheme using the cash basis, you'd think bad debt relief doesn't apply. But the rules still let you claim the difference between 20% standard VAT and your flat rate percentage on unpaid invoices. This is confirmed in HMRC guidance, but many businesses overlook it.
Occasionally suppliers will charge VAT when they were never registered. Who would ever question it? HMRC has a free tool you can use to check VAT numbers if you're in doubt, or the invoice is large and from a new supplier.
Even the best businesses with solid accounting in place accumulate small VAT errors over time. There is a whole industry set up for this, and sometimes refunds can be surprisingly high. Most operate on a percentage of what they can get you back, so it's worth running one a year.
Every single one of these happens regularly to real businesses. Some are obvious; some are traps that even experienced owners fall into.
Working out if you need to register for VAT isn't just as simple as 'do you turn over £90k a year', and there are good reasons you might want to register as soon as possible, especially if you're in B2B.
Let's look at when you have to register first:
You exceed £90,000 in any rolling 12-month period. Rolling just means the last 12 months from now, not annual or a tax year.
Here are two examples of why this matters:
1. You're an online retailer selling Christmas cards, you launch in October, and by mid-December you've already smashed through £91,000 in just 2.5 months.
2. You're a consultant billing £7,800 per month so you hit £93,600 at the 12-month mark.
In both cases you need to notify HMRC 30 days from the end of the month you crossed the threshold. If you forget, you'll owe backdated VAT and you can't re-charge your customers later.
Here's the one rule most people don't know about. If you expect your turnover to exceed £90,000 in the next 30 days you need to register. This could really bite you if you miss it. Say you do a nice £100k deal with net 30-day terms, you must register immediately. Not at the end of the month. If you don't and don't charge VAT on that deal, you'll still owe £16,666.67 out of your own pocket.
If you have a genuinely one-off peak above £90,000 due to a one-off project, or liquidation sale, you can use a VAT1 form to apply for a registration exception, which would be wise to do in advance, as HMRC can reject these. Could be a lifeline if you need it.
1. If you're in B2B you'll want to register pretty much no matter what, because you can reclaim all expenses back, and it won't put any customers off, as they can also reclaim.
2. Some customers will not trade with companies who aren't registered, or at a minimum you'll be seen as less serious, or small time which can affect the type of deal size you can get.
For B2B, VAT is pretty much a non-issue. But for B2C where the end customer can't reclaim VAT back is where things get complicated, and delaying registration helps keep your profit up.
HMRC will calculate the VAT you should have charged from the date you were required to register. You owe that full amount, plus interest. Penalties are now behaviour-based rather than fixed bands, and can be reduced if the error was careless and you make an unprompted disclosure. In more serious cases, penalties can be higher, but telling HMRC before they find the issue themselves almost always results in much lower penalties.
Four different rates, dozens of exceptions, and some genuinely bizarre classifications. Here's what you need to know.
The default. If in doubt, it's probably 20%.
Home energy, children's car seats.
Most food, books, children's clothing, public transport, exports.
Insurance, finance, education, health. No VAT in, no VAT out.
This one trips almost everyone up, and has big financial implications. Zero-rated means 0% VAT, but it's still within the VAT scheme so you can reclaim VAT on supplies. VAT exempt is outside the system completely, so input and output VAT are both exempt. Big difference.
Two businesses, each spending £50,000 + VAT on costs (£10,000 in input VAT):
These edge cases have been long-running in the history of VAT. For example a Jaffa Cake is zero-rated as it's a cake, but a chocolate covered biscuit is standard rated. Or like how VAT is due on a hot pasty, but not a cold one. How about warm then? These cases have been tested in tax tribunals, to much public interest and amusement.
If you make a mix of taxable and exempt supplies, you can only reclaim input VAT proportionally. There's a de minimis rule though: if your exempt input VAT is under £625/month on average AND less than 50% of your total input VAT, you can reclaim it all. Worth checking with your accountant.
How the UK stacks up against the rest of the world.
| Country | Standard Rate | Registration Threshold |
|---|---|---|
| 🇬🇧 United Kingdom | 20% | £90,000 (~€105k) |
| 🇺🇸 United States | No VAT (sales tax 0-10.25%) | Varies by state |
| 🇩🇪 Germany | 19% | €22,000 |
| 🇫🇷 France | 20% | €37,500 / €85,000 |
| 🇮🇪 Ireland | 23% | €40,000 / €80,000 |
| 🇳🇱 Netherlands | 21% | €20,000 |
| 🇪🇸 Spain | 21% | None |
| 🇮🇹 Italy | 22% | €85,000 |
| 🇸🇪 Sweden | 25% | SEK 80,000 (~€7k) |
| 🇭🇺 Hungary | 27% (highest in EU) | None |
| 🇱🇺 Luxembourg | 17% (lowest in EU) | €35,000 |
| 🇨🇭 Switzerland | 8.1% | CHF 100,000 (~€105k) |
| 🇦🇺 Australia | 10% (GST) | AUD 75,000 (~£39k) |
| 🇨🇦 Canada | 5% (GST + provincial) | CAD 30,000 (~£17k) |
| 🇦🇪 UAE | 5% | AED 375,000 (~£80k) |
| 🇸🇬 Singapore | 9% (GST) | SGD 1,000,000 (~£590k) |
| 🇯🇵 Japan | 10% | ¥10,000,000 (~£52k) |
| 🇮🇳 India | 18% (GST) | ₹4,000,000 (~£37k) |
| 🇿🇦 South Africa | 15% | ZAR 1,000,000 (~£43k) |
| 🇧🇷 Brazil | ~34% (combined) | Varies |
The UK's £90,000 threshold is the joint highest in the OECD alongside Switzerland. More than double the EU average of around €44,000. That keeps roughly 3.2 million UK small businesses out of VAT entirely.
This VAT Calculator was designed to calculate VAT (Value Added Tax) on invoices or receipts, while also providing guides on VAT rates, the Flat Rate Scheme and help-pages.
Any business or individual can access our handy VAT calculator with the full range of UK and international rates. VAT can be easily added to a net amount or subtracted from a gross amount.
It's a useful tool for calculating VAT in a few seconds. You can also change the VAT rate if it differs from the standard 20%, or for foreign VAT with different rates.
The formula for calculating VAT is simple. To add VAT, multiply the net price (excluding VAT) by 1.20 at the standard 20% rate. For example, a net price of £500 × 1.20 = £600 gross price (including VAT), with £100 being the VAT.
To remove VAT, divide the gross price (inclusive of VAT) by 1.20 to get the price excluding VAT. So £600 ÷ 1.20 = £500 net. A common mistake is subtracting 20% instead of dividing. £600 minus 20% gives you £480, which is wrong.
This online VAT calculator gives you instant, accurate results in one step. Enter any amount, then press 'Add VAT' to calculate the VAT-inclusive price from a net amount, or 'Remove VAT' to reverse calculate the VAT-exclusive price from a gross amount. Both options show you the net price, gross price and VAT amount.
The rate is set to the current UK standard rate of 20%, but you can adjust it for the reduced rate (5%), or to match international VAT and GST rates.
Whether you're a freelancer checking an invoice, a contractor quoting a client, or a small business owner pricing goods and services, the calculator handles the computation so you don't have to.
Value Added Tax, or VAT, was first introduced in 1973 as a replacement for the old 'Purchase Tax'. It's charged on goods and services sold in the UK and the Isle of Man. Since its introduction, it has become a major source of revenue for the Government, generating over £170b in 2024–25 and continuing to grow each year.
Since leaving the EU, the UK no longer has to follow guidelines set by Brussels and can, in theory, set rates lower than 15%. While the VAT rate has changed over time, it has recently ranged from 15%–20%. The standard rate increased from 17.5% to 20% on 4 January 2011.
This guide is for informational purposes only and does not constitute professional tax advice. VAT rules change regularly. Always verify current rates, thresholds, and rules with HMRC or a qualified accountant. Last updated: February 2026.