UK VAT Calculator (20%)

UK VAT: 20% standard rate

Most goods and services in the United Kingdom carry the 20% standard VAT rate. Adding VAT is straightforward: gross = net · 1.20. Going the other way, you strip VAT out of a gross price with net = gross / 1.20. So a net price of £100 turns into £120 gross, and that £120 breaks down into £20 of VAT plus £100 net. There are two other rates as well. A reduced 5% rate covers things like residential energy and child car seats, and a 0% zero rate applies to most food, books, newspapers, and children's clothing. Once taxable turnover passes £90,000 in a year (the 2024/25 threshold), a business has to register for VAT.

Applications

This comes up in HMRC compliance for UK-resident businesses and in international e-commerce pricing on Amazon UK, eBay UK, or Shopify. Brazilian exporters quoting B2B or B2C for the UK market run into it too, along with anyone doing the accounting for cross-border services and digital products or issuing invoices to UK clients.

FAQ

Does every item carry 20%? No. Most food, books, children's clothes, and exports are zero-rated. Residential energy and some health products sit at 5%, and financial services and education are usually exempt altogether.

When am I required to register for VAT? The trigger is taxable turnover above £90,000 over 12 months, or the point where you expect to cross that line within the next 30 days. If you're below it, you can still register voluntarily.

How do I extract the VAT from a gross UK price? Just divide by 6. A £120 gross price holds £20 of VAT, since 120/6 is 20. The same thing written as a formula is VAT = gross · 1/6 ≈ gross · 0.1667.