UK VAT Calculator 2025 | 20%, 5% & Zero Rate

  • Adam
  • November 3, 2025

Free UK VAT calculator. Calculate 20% standard, 5% reduced, or 0% zero-rated tax instantly. Add/remove VAT with official HMRC formulas. Updated 2025.

🇬🇧 UK VAT Calculator

Calculate Value Added Tax - Updated 2025

Standard Rate: 20% | Reduced: 5% | Zero: 0%
VAT Rate: 20%
Base Amount (Ex VAT): £0.00
VAT Amount: £0.00
Total Amount (Inc VAT): £0.00

How to Calculate UK VAT

Value Added Tax (VAT) is an indirect tax applied to most supplies of goods and services in the United Kingdom. The standard rate is 20%, with reduced rates of 5% and 0% applied to specific categories of goods and services. VAT has been part of the UK tax system since 1973 and is administered by HM Revenue & Customs (HMRC).

2025 Update: The standard VAT rate remains at 20%. The reduced rate of 5% applies to specific items like domestic energy and children's car seats. Zero-rating applies to essentials like food, books, and children's clothing.

Adding VAT to a Price

When you need to add VAT to a VAT-exclusive price, use these formulas:

VAT Amount = Base Price × (VAT Rate ÷ 100)
Total Price (Inc VAT) = Base Price × (1 + VAT Rate ÷ 100)

Example for 20% standard rate: If the base price is £100 (excluding VAT):

VAT Amount = £100 × 0.20 = £20.00

Total Price = £100 + £20.00 = £120.00

Example for 5% reduced rate: If the base price is £100 (excluding VAT):

VAT Amount = £100 × 0.05 = £5.00

Total Price = £100 + £5.00 = £105.00

Example for 0% zero-rated: If the base price is £100 (excluding VAT):

VAT Amount = £100 × 0.00 = £0.00

Total Price = £100 + £0.00 = £100.00

Removing VAT from a Price

When you need to calculate the VAT-exclusive price from a VAT-inclusive price, use these formulas:

Base Price (Ex VAT) = Total Price ÷ (1 + VAT Rate ÷ 100)
VAT Amount = Total Price - Base Price

Example for 20% standard rate: If the total price is £120 (including VAT):

Base Price = £120 ÷ 1.20 = £100.00

VAT Amount = £120 - £100 = £20.00

Helpful Tip: VAT at 20% means that approximately 16.67% of the VAT-inclusive price is the actual VAT component (because 20÷120 ≈ 0.1667).

Understanding UK VAT System

What is VAT?

Value Added Tax (VAT) is a consumption tax applied to goods and services in the United Kingdom. It's an indirect tax collected by businesses on behalf of the government. VAT was introduced in the UK on April 1, 1973, when the UK joined the European Economic Community (now the EU). The current standard rate of 20% has been in effect since January 4, 2011, when it increased from 17.5%.

The Three UK VAT Rates

Standard Rate (20%): Applies to most goods and services including clothing, electronics, food purchased in restaurants, alcohol, and professional services.

Reduced Rate (5%): Applies to specific items considered socially beneficial, including:

  • Domestic fuel and power (gas and electricity for homes)
  • Children's car seats
  • Energy-saving materials (insulation, solar panels)
  • Mobility aids for elderly or disabled people
  • Smoking cessation products
  • Certain renovation and repair work in buildings over 2 years old

Zero Rate (0%): Applies to essential goods and services, and businesses can still claim VAT input credits:

  • Most food items (fresh fruit, vegetables, bread, milk, eggs)
  • Children's clothing and shoes
  • Books and printed publications
  • Newspapers and magazines
  • Public transport (buses, trains)
  • Prescription medications
  • Exports outside the UK

VAT Registration Requirements

Businesses in the UK must register for VAT if:

  • Annual turnover exceeds £90,000 - Mandatory registration threshold (as of 2025)
  • Expected to exceed £90,000 within 30 days - Even if not yet reached

Businesses below the threshold can voluntarily register for VAT to reclaim VAT on purchases and appear more established.

Making Tax Digital (MTD)

All VAT-registered businesses (with some exceptions) must use compatible software to:

  • Keep digital VAT records
  • File VAT returns electronically to HMRC
  • Maintain records for at least 6 years

VAT returns are typically filed quarterly, with VAT due to be paid or refunded accordingly.

VAT-Exempt and Special Supplies

Important Distinction: Zero-rated supplies (0%) allow VAT input credit claims, while exempt supplies do not. This creates a real cost for exempt suppliers.

Exempt Supplies (No VAT, No Input Credit)

Some supplies are exempt from VAT, meaning no VAT is charged and businesses cannot claim VAT input credits on related expenses:

  • Financial Services: Banking, insurance, investment services, money lending
  • Property Transactions: Sale and lease of buildings (except listed exceptions)
  • Education: Education provided by approved educational establishments
  • Health Services: Most healthcare services provided by NHS or registered professionals
  • Betting and Gaming: Betting, gaming, and lottery services
  • Sports and Cultural: Admission to sporting events, cultural performances (some exceptions)
  • Postal Services: Universal postal services

Items Subject to 20% Standard Rate

The following are subject to standard 20% VAT:

  • Electronics (phones, computers, tablets)
  • Clothing (excluding children's clothing)
  • Alcohol and tobacco
  • Motor vehicles and parts
  • Fuel and oil
  • Household goods and furniture
  • Restaurant meals and hot food
  • Professional services (legal, accounting, consulting)
  • Hairdressing and beauty treatments
  • Entertainment and accommodation under 28 days

Items Subject to 5% Reduced Rate

The following are subject to reduced 5% VAT:

  • Domestic fuel (gas and electricity)
  • Children's car seats
  • Energy-saving materials and installation
  • Mobility aids for disabled people
  • Smoking cessation products
  • Certain repair and renovation services
  • Residential accommodation (hotels over 28 days)

UK VAT Quick Reference

Aspect Details
Standard VAT Rate 20% (since January 4, 2011)
Reduced VAT Rate 5% (for specified items)
Zero VAT Rate 0% (for essentials like food, books)
Introduction Date April 1, 1973
Registration Threshold £90,000 annual turnover
Administering Authority HM Revenue & Customs (HMRC)
Filing Frequency Quarterly to HMRC
Tax Type Value Added Tax (VAT)
Input Tax Credits Available for registered businesses
Digital Filing Making Tax Digital (MTD) required

Frequently Asked Questions (FAQ)

What is VAT in the UK?
VAT (Value Added Tax) is an indirect consumption tax applied to most goods and services in the UK. It's collected at each stage of the supply chain and ultimately borne by the final consumer. The standard rate is 20%, with reduced rates of 5% and 0% for specific items.
What is the standard VAT rate in the UK?
The standard VAT rate in the UK is 20%. This rate has been in effect since January 4, 2011, when it increased from 17.5% as part of government fiscal measures. The 20% rate applies to most goods and services unless they qualify for reduced or zero-rating.
How do I calculate VAT in the UK?
To add VAT: multiply the base price by 1.20 (for 20% VAT), or by 1.05 (for 5% VAT). To remove VAT: divide the total price by 1.20 or 1.05. For example, £100 with 20% VAT becomes £120; to reverse: £120 ÷ 1.20 = £100.
Who needs to register for VAT in the UK?
Businesses must register for VAT if their taxable turnover exceeds £90,000 in any 12-month period, or if they are expected to exceed this threshold within 30 days. Businesses below the threshold can voluntarily register to reclaim VAT on purchases.
What items are zero-rated in the UK?
Zero-rated items include most food items (fresh produce, bread, milk), children's clothing and shoes, books and newspapers, prescription medications, public transport, and exports. For zero-rated supplies, no VAT is charged but businesses can still claim VAT input credits on related expenses.
What is the 5% reduced VAT rate applied to?
The 5% reduced rate applies to items considered socially beneficial, including domestic fuel (gas and electricity), children's car seats, energy-saving materials, mobility aids for disabled people, smoking cessation products, and certain renovation and repair services.
Are hot food and restaurant meals subject to VAT?
Yes, hot food and restaurant meals are subject to the standard 20% VAT rate. However, cold takeaway food may also be subject to standard rate. Most unprocessed food purchased from supermarkets is zero-rated, making this distinction important for businesses and consumers.
Can businesses claim VAT input credits?
Yes, registered VAT businesses can claim input tax credits for VAT paid on goods and services purchased for business use. This prevents tax accumulation through the supply chain. However, input credits cannot be claimed on exempt supplies or personal expenses.
What is Making Tax Digital (MTD)?
Making Tax Digital (MTD) is a government initiative requiring VAT-registered businesses to maintain digital VAT records and file VAT returns electronically using compatible software. MTD records must be kept for at least 6 years, and most businesses must comply unless they qualify for exceptions.
Are children's clothes zero-rated?
Yes, most children's clothing is zero-rated in the UK. However, the item must be specifically designed for young children and meet size/design criteria. Adult clothing of any size is subject to the standard 20% VAT rate, even if small enough for children.

Official UK Government Sources & References

All VAT data is sourced from official UK government agencies and trusted financial authorities:

🏛️ GOV.UK - Official VAT Rates Information 📊 GOV.UK - How VAT Works Complete Guide 📝 GOV.UK - VAT Registration Requirements 💼 HM Revenue & Customs (HMRC) - Official Tax Authority 🔄 GOV.UK - Making Tax Digital (MTD) Requirements ✅ GOV.UK - VAT Rate Checker for Specific Items

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