UK VAT rates
The standard rate is 20%, applied to most goods and services. A reduced 5% rate covers things like domestic energy and children’s car seats, and a 0% rate applies to most food, books and children’s clothing.
Removing VAT from a gross price
To find the net price from a VAT-inclusive total, divide by 1.20 (for 20%). The difference is the VAT. Switch the calculator to “Remove VAT” to do this automatically.
Zero-rated vs exempt
Most sales use the 20% standard rate, but the reduced 5% rate and the zero rate exist for specific categories, and some supplies (such as insurance, postage stamps and some property) are exempt — different from zero-rated, because exempt sales don’t let the seller reclaim related VAT on their costs.
Frequently asked questions
How do I remove 20% VAT?
Divide the gross amount by 1.2, not by 0.8. £120 inc-VAT ÷ 1.2 = £100 net, so the VAT is £20.
When must a business register for VAT?
When VAT-taxable turnover exceeds the registration threshold (£90,000). Below that, registration is voluntary.
Can I reclaim the VAT I pay?
Only VAT-registered businesses can reclaim VAT on eligible purchases as “input tax” on their VAT return. Consumers and non-registered businesses pay VAT as a final cost.
Is the VAT fraction useful?
Yes — for a 20% rate the VAT inside a gross price is always 1/6 of the total. So £120 inc-VAT contains £120 ÷ 6 = £20 of VAT, which is a quick mental check.