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Freelance & Business · Standard rate: 20%

UK VAT Calculator

Add VAT to a net price, or strip it back out of a gross one — at 20%, 5% or 0%. Includes a Flat Rate Scheme comparison.

Your amount

What do you want to do?
£

The price before VAT is added.

VAT rate
Gross (you charge customer)
£120.00
VAT
£20.00
Net
£100.00
Rate applied: 20%

Line-by-line

  • Net (before VAT)
    £100
  • VAT @ 20%
    −£20
  • Gross (after VAT)
    £120

Should you join the Flat Rate Scheme?

Compares what you’d pay HMRC under standard VAT accounting vs. the Flat Rate Scheme (FRS) for your trade.

Standard accounting
£20.00
20% of your net sales, paid to HMRC. You can reclaim input VAT separately.
Flat Rate Scheme
£17.40
14.5% of your VAT-inclusive turnover. You can’t reclaim input VAT (with limited exceptions).
Headline difference
£2.60
FRS looks cheaper before counting input VAT you could otherwise reclaim.

This is a headline comparison only. The real answer depends on how much VAT you’d reclaim on purchases under standard accounting — check with an accountant before switching.

How we calculated your result

VAT is calculated as a flat percentage of the net (pre-VAT) price. Two operations:

  • Adding VAT: gross = net × (1 + rate). At 20%, £100 net becomes £120 gross.
  • Removing VAT: net = gross ÷ (1 + rate). At 20%, £120 gross is £100 net + £20 VAT — not £120 − 20%, which would wrongly give £96.

That second one trips a lot of people up: VAT is added on top of the net, so to reverse it you divide, not subtract.

Official UK rules in simple English

The UK has three VAT rates, set by HMRC and applied consistently across England, Scotland, Wales and Northern Ireland:

Rate%Typical examples
Standard20%Most goods and services — electronics, professional services, alcohol, eating out.
Reduced5%Domestic gas/electricity, children’s car seats, mobility aids, some property renovations.
Zero0%Most food, books and newspapers, children’s clothes, public transport, prescriptions.

You must register for VAT once your taxable turnover passes £90,000 in any rolling 12-month period (this is the threshold from April 2024 onwards). You can register voluntarily below that if you want to reclaim input VAT.

The Flat Rate Scheme (FRS) is an alternative for small businesses with turnover under £150,000. You charge customers 20% as normal, but pay HMRC a single industry-specific percentage of your gross sales — and generally can’t reclaim input VAT.

Common pitfalls to watch out for

  • ⚠ Don’t just subtract 20% to remove VAT

    A £120 inc-VAT price contains £20 of VAT, not £24. The correct formula is divide by 1.20. Subtracting 20% gives you £96, which is £4 off — a small percentage error that compounds across an invoice.

  • ⚠ Zero-rated is not the same as VAT-exempt

    Zero-rated supplies still count as taxable — you can reclaim input VAT on related purchases. Exempt supplies (e.g. insurance, education, most financial services) can’t reclaim input VAT and don’t count toward the £90k registration threshold.

  • ⚠ FRS isn’t always cheaper

    The Flat Rate Scheme looks simple, but if you have significant business expenses with reclaimable VAT (laptops, software, travel), standard accounting usually beats it. The ‘limited cost trader’ rate of 16.5% wipes out most of the headline saving.

  • ⚠ The £90k threshold is rolling, not annual

    HMRC looks at the last 12 months on a rolling basis — not your tax year. Cross £90,000 in any 12-month window and you must register within 30 days, even if your accounting year shows less.

Frequently asked questions

I’m a sole trader earning £45k. Do I have to register?
No — you’re well under the £90k threshold. You can voluntarily register if your customers are VAT-registered businesses (so they can reclaim it) and you have purchases with reclaimable input VAT. Otherwise, staying unregistered keeps your prices 20% cheaper to consumers.
What VAT rate applies to food?
Most basic food is zero-rated (0%). But ‘luxury’ food and anything consumed on the premises is standard-rated. Hot takeaway food, alcohol, confectionery, crisps, and restaurant meals all attract 20% VAT.
Can I reclaim VAT on a laptop I use for work?
Yes, if you’re VAT-registered on standard accounting. You can reclaim 100% of the VAT if it’s used entirely for business, or apportion it if there’s personal use. Keep the VAT invoice — HMRC needs it as evidence.

VAT rules are simple in theory but full of edge cases (partial exemption, place-of-supply rules, reverse charge for EU services). For anything non-trivial, talk to a VAT-qualified accountant.

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