Question 1

How do I add VAT to a price in the UK?

Accepted Answer

To add 20% VAT to a net price, multiply the price by 1.20. For example, a £100 net price becomes £120 including VAT. The VAT amount itself is £20. For the 5% reduced rate, multiply by 1.05. Our calculator does this instantly for any amount.

Question 2

How do I remove VAT from a gross price?

Accepted Answer

To remove 20% VAT from a gross (VAT-inclusive) price, divide by 1.20. For example, a £120 gross price divided by 1.20 gives £100 net. The VAT element is £20. This is called 'backing out' or 'extracting' the VAT. Our calculator does this automatically when you select 'Remove VAT'.

Question 3

What is the VAT registration threshold in 2025?

Accepted Answer

The VAT registration threshold for 2025/26 is £90,000. If your taxable turnover exceeds this in any 12-month rolling period, you must register for VAT with HMRC. You can also register voluntarily below this threshold, which can be beneficial if your customers are VAT-registered businesses.

Question 4

What items are exempt from VAT in the UK?

Accepted Answer

Zero-rated items (0% VAT) include most food, children's clothing, books and newspapers, prescription medicines, and public transport fares. Exempt items (outside the VAT system entirely) include insurance, financial services, education, health services and postal services. Reduced rate (5%) applies to home energy and children's car seats.

Question 5

What is the difference between zero-rated and VAT-exempt?

Accepted Answer

Zero-rated goods have a 0% VAT rate — they are still technically VAT-able supplies, so VAT-registered businesses can reclaim input VAT on related purchases. VAT-exempt supplies are outside the VAT system entirely — businesses cannot reclaim input VAT on costs related to exempt supplies. This distinction is important for partial exemption calculations.

Rate	%	Applies to
Standard Rate	20%	Most goods and services
Reduced Rate	5%	Home energy, children's car seats, smoking cessation products
Zero Rate	0%	Food, children's clothing, books, newspapers, public transport
Exempt	N/A	Insurance, financial services, education, health services

How to Calculate VAT in the UK

UK VAT Rates 2025

VAT Registration Threshold

What is VAT?