PayoutMath
Seller Pricing

VAT Calculator UK (2026)

Add or remove VAT from any amount — standard 20%, reduced 5%, or zero-rated. Most UK businesses cross the £90,000 turnover threshold for mandatory VAT registration eventually; this calculator handles both directions of the maths.

Last verified: 25 April 2026 Source: GOV.UK — VAT rates Next review: 25 October 2026
Inputs
Add: amount is net, calculator adds VAT. Extract: amount is gross (VAT-inclusive), calculator works out the net + VAT.
Net amount —
VAT amount —
Gross amount —
VAT rate applied —
Add 20% VAT to £100
£100 · Add VAT · Standard 20%

Net £100 + 20% VAT (£20) = Gross £120. Standard supplier-to-trade-customer maths. Most B2B invoices show this breakdown explicitly.

Extract VAT from £120
£120 · Extract VAT · Standard 20%

Reverse VAT: divide gross by 1.20, not by 1.20 then multiply by 20%. £120 / 1.20 = £100 net. VAT element £20. Common need when you have a VAT-inclusive receipt and want to record the net amount in your accounts.

Reduced rate (5%) on £200
£200 · Add VAT · Reduced 5%

Reduced 5% rate covers narrow categories (domestic energy, kids’ car seats, mobility aids). £200 + 5% = £210. Most sellers won’t encounter this rate.

Awkward extraction — £99.50 gross
£99.50 · Extract VAT · Standard 20%

Awkward number to do in your head. £99.50 / 1.20 = £82.92 net (rounded). VAT element £16.58. Useful for parsing receipts and supplier invoices when the breakdown isn’t shown.

VAT calculator that adds or extracts UK VAT at standard (20%), reduced (5%), or zero (0%) rates. The maths is straightforward but easy to get backwards.

The four common scenarios

1. Add VAT to a net price (B2B invoicing) You’re a VAT-registered business sending an invoice. Net price × 1.20 = gross. £100 → £120.

2. Extract VAT from a gross price (parsing receipts) You have a VAT-inclusive receipt; need the net for accounts. Gross / 1.20 = net. £120 → £100 net + £20 VAT.

3. Calculate VAT element on a sale You’re a VAT-registered seller; need to know how much VAT you collected. Net × 0.20 = VAT. £100 sale → £20 VAT to remit.

4. Reverse-engineer net from gross (the common error spot) Easy mistake: Gross × 0.80. Wrong. £120 × 0.80 = £96, not £100. Correct: Gross / 1.20.

UK VAT rates (2026)

Rate Percentage Examples
Standard 20% Most goods and services
Reduced 5% Domestic energy, mobility aids, kids’ car seats, contraceptives
Zero-rated 0% Books, newspapers, most food, kids’ clothes, exports outside UK
Exempt n/a Insurance, education, some financial services, healthcare

The distinction between zero-rated and exempt is small but real: zero-rated suppliers can still reclaim input VAT; exempt suppliers can’t.

The £90,000 threshold

Cross £90,000 of UK turnover (trailing 12 months) and you must register within 30 days. Below that, registration is voluntary. Reasons to register voluntarily:

  1. You sell mainly to VAT-registered businesses — they don’t care about the 20% on top because they reclaim it.
  2. You have significant input VAT — equipment, services, professional fees you’d want to reclaim.
  3. You signal scale — being VAT-registered tells potential customers you’re a real business.

Drawbacks of voluntary registration: - ~£500-£1,500/year of accountancy cost for VAT returns - Consumer-facing prices effectively go up 20% (you’re now charging VAT) - Quarterly VAT returns + record-keeping admin

VAT vs income tax — they’re separate

VAT collected from customers is HMRC’s money, held briefly by you. Don’t include it in profit calculations. Income tax (and Class 4 NI) applies to your profit, not your VAT-inclusive turnover. The side hustle tax calculator handles income tax once you’ve run your post-VAT profit through it.

Common UK VAT scenarios this calculator handles

  • Add VAT to a B2B invoice (net price × 1.20)
  • Extract VAT from a retail receipt (gross / 1.20)
  • Calculate VAT element on a sale (net × 0.20)
  • Apply reduced (5%) rate to domestic energy or mobility products
  • Confirm zero-rated treatment for books, kids’ clothes, food, exports

Related calcs

Common mistakes
  • Calculating reverse VAT as gross × 0.80 instead of gross / 1.20. Easy mistake. Gross = Net × 1.20. Therefore Net = Gross / 1.20, NOT Gross × 0.80. £120 × 0.80 = £96 (wrong). £120 / 1.20 = £100 (right). The error is small at low values but compounds quickly: £1,000 × 0.80 = £800 (wrong by £33).
  • Confusing ‘add VAT’ with ‘extract VAT’. Add: input is net, output is gross. Extract: input is gross, output is net. Read your receipt carefully — most retail prices in the UK are gross (VAT-inclusive); B2B prices are usually net (VAT exclusive).
  • Applying 20% standard rate when a different rate applies. Books, kids’ clothes, and most food are zero-rated. Domestic energy is reduced rate (5%). Some services have specific rates. Check gov.uk/vat-rates for the full list before assuming 20% applies.
  • Including VAT in profit calculations as if it were income. VAT collected from customers is not your money — it’s HMRC’s, held briefly. For VAT-registered businesses, exclude VAT from profit calculations entirely.
  • Forgetting that your VAT registration status changes which side of the calculation matters. Non-registered: you can’t reclaim supplier VAT but don’t charge it on sales. Registered: opposite. The margin and VAT calculator handles this distinction.
What this calculator doesn't cover
  • UK VAT only — doesn’t model EU/US/international rates.
  • Standard, reduced, and zero rates only — doesn’t include the second-hand goods margin scheme, Flat Rate Scheme, domestic reverse charge, or partial exemption.
  • Doesn’t model historical rates — uses current 2025/26 rates only.
  • Doesn’t model imports/exports — those have separate place-of-supply rules.
  • Doesn’t include VAT-registration threshold checking — see the MTD eligibility checker for that.

Frequently asked questions

How do I work out VAT on a price?

Net amount × 1.20 = gross (VAT-inclusive) amount. Equivalently: net × 20% = VAT element. £100 × 1.20 = £120, with £20 of that being VAT. To go the other way: gross / 1.20 = net. £120 / 1.20 = £100 net + £20 VAT.

What are the UK VAT rates in 2026?

Three rates: standard (20%) covers most goods and services; reduced (5%) covers domestic energy, mobility aids, children’s car seats, smoking cessation products, and a few other niche items; zero (0%) covers books and newspapers, most food, children’s clothing, and exports outside the UK. Full list: gov.uk/vat-rates.

When do I need to register for VAT?

When trailing 12-month turnover exceeds £90,000 (2025/26 threshold). You have 30 days from the breach to register. Below £90,000, registration is voluntary — sometimes worth doing if you sell mainly to other VAT-registered businesses or have lots of input VAT to reclaim.

Why does my supplier's invoice show VAT?

Because they’re VAT-registered. They charge you VAT (which they remit to HMRC), and you can reclaim it from HMRC if you’re VAT-registered yourself. If you’re not VAT-registered, the VAT they charge is just an extra cost to you — you pay £120 for what costs £100 net, with no recovery.

Can I reclaim VAT on business expenses?

Only if you’re VAT-registered. Once registered, most business expenses with VAT charged on them are reclaimable: equipment, software subscriptions, professional services, fuel (with rules), most goods you resell. There are exceptions (entertainment, business cars, some imports). Keep VAT receipts religiously.

What's the difference between 'zero-rated' and 'exempt' VAT?

Zero-rated supplies (books, kids’ clothes, most food, exports): VAT charged at 0%, but you can still reclaim input VAT on costs. Exempt supplies (insurance, some financial services, healthcare): no VAT charged, AND you can’t reclaim input VAT. Zero-rated is friendlier to sellers.

Does VAT affect my income tax?

No. VAT and income tax are separate. VAT is collected/remitted; profit (after VAT washes through) is what’s subject to income tax. Run your post-VAT profit through the side hustle tax calculator for income tax + Class 4 NI.

About this calculator. Maintained by Jordan — a UK seller and creator who actually uses these platforms (Etsy, eBay, Vinted, DistroKid). Built to be accurate, mobile-fast, and honest about its limits. Spot a bug? Email hello@payoutmath.co.uk.