UK VAT Explained — How to Add and Remove VAT (2026 Guide)
Updated October 2026 · 5 min read
Quick start: Open the free UK VAT Calculator — add or remove VAT from any amount instantly.
Value Added Tax (VAT) is a consumption tax collected at every stage of production and sale. In the UK, it is administered by HMRC. Most businesses must register for VAT once their taxable turnover exceeds £90,000 per year (2024/25 threshold).
UK VAT Rates (2026)
| Rate | % | Applies to |
|---|---|---|
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Home energy, children's car seats, some health products |
| Zero rate | 0% | Food, books, children's clothes, most public transport |
| Exempt | N/A | Finance, insurance, education, health services |
How to Add VAT to a Price
To calculate the VAT-inclusive price from a net (ex-VAT) price:
VAT-inclusive price = Net price × 1.20
Or × 1.05 for the 5% reduced rate
Example: A service costs £500 net. Add 20% VAT: £500 × 1.20 = £600 inc. VAT. The VAT amount is £100.
How to Remove VAT from a Price (Reverse VAT)
To find the net price from a VAT-inclusive price:
Net price = VAT-inclusive price ÷ 1.20
Or ÷ 1.05 for the 5% rate
Example: A receipt shows £360 inc. VAT. Net price: £360 ÷ 1.20 = £300. VAT paid: £60.
When Must You Register for VAT?
You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period (threshold as of April 2024). You can also register voluntarily below this threshold — useful if your customers are VAT-registered businesses who can reclaim input tax.
Making Tax Digital (MTD)
All VAT-registered businesses must file VAT returns digitally under HMRC's Making Tax Digital scheme. This requires compatible accounting software (Xero, QuickBooks, FreeAgent, etc.). Paper VAT returns are no longer accepted.
Add or Remove UK VAT Instantly
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