How is UK VAT calculated in 2026?
Value Added Tax (VAT) is an indirect tax charged on most goods and services in the UK, collected by VAT-registered businesses and paid to HMRC. This calculator works in two directions. “Add VAT” starts from a net base: VAT = net × rate, and the gross total = net + VAT. “Remove VAT” extracts the tax from a gross amount that already includes it: net = gross ÷ (1 + rate), and VAT = gross − net. For 2026 the UK keeps three VAT rates, unchanged: 20% is the standard rate (in effect since 4 January 2011) and applies to most goods and services; 5% is the reduced rate, applying to things like domestic fuel and power (home energy), children's car seats, energy-saving materials and welfare or mobility aids; 0% is the zero rate, applying to most food, books and newspapers, children's clothing and most prescription items — the trader charges 0% but can still reclaim input VAT. A worked example at the standard 20% rate: for a net base of £100.00 the VAT is 100 × 0.20 = £20.00, so the gross total is 100 + 20 = £120.00. The reverse — removing VAT from a gross total of £120.00 at 20% — gives net = 120 ÷ 1.20 = £100.00 and VAT = 120 − 100 = £20.00. At the reduced 5% rate, removing VAT from a gross £105.00 gives a net of £100.00 and £5.00 of VAT. Zero-rated items charge no VAT, so the net and gross are always equal. Note that “exempt” supplies (such as postage stamps and most financial and property transactions) are different from zero-rated and are not a selectable rate here. Businesses must register for VAT once taxable turnover exceeds the £90,000 threshold (rolling 12 months). Calculations keep full precision internally and amounts are shown to two decimal places.
Official source: HMRC / gov.uk · Data updated: 2026-06-03