What is VAT?
Value Added Tax (VAT) is a consumption tax levied on most goods and services sold in the UK. It is administered by HM Revenue & Customs (HMRC) and is a significant source of government revenue.
Current UK VAT Rates (2026)
- Standard rate: 20% — most goods and services
- Reduced rate: 5% — domestic fuel, children's car seats, sanitary products
- Zero rate: 0% — most food, children's clothing, books, public transport
VAT Registration Threshold
As of 2026, businesses with taxable turnover exceeding £90,000 must register for VAT. Businesses below this threshold can voluntarily register, which may be beneficial if you sell mainly to VAT-registered businesses.
How to Calculate VAT
Adding VAT: Price × (1 + VAT rate/100). For 20% VAT: £100 × 1.20 = £120. Removing VAT: Price ÷ (1 + VAT rate/100). For 20% VAT: £120 ÷ 1.20 = £100.
Use Our Calculator
Try our free VAT calculator to add or remove VAT instantly. Supports all UK VAT rates.