UK VAT Rates Explained for 2026
In the United Kingdom, Value Added Tax (VAT) is a consumption tax charged on most goods and services provided by registered businesses. The standard rate is set at 20% by HM Revenue & Customs (HMRC), which has been in place since 4 January 2011.
| Rate Type | Percentage | Common Eligible Goods & Services |
|---|---|---|
| Standard Rate | 20% | Electronics, professional fees, alcohol, restaurant meals, transport |
| Reduced Rate | 5% | Domestic fuel and electricity, children's car seats, mobility aids |
| Zero Rate (0%) | 0% | Most staple groceries, books and newspapers, children's clothing |
| Exempt | No VAT | Financial transactions, postal stamps, health services, education |
How to Add 20% VAT to Any Price
To calculate the gross price when you have the net (pre-tax) figure:
- Gross Amount:
Net × 1.20 - VAT Only:
Net × 0.20 - Example: For £500 net, multiply £500 × 1.20 = £600 gross (£100 VAT).
How to Remove VAT from a Gross Price
When you have a receipt or total bill that includes 20% VAT and need the net price:
- Net Amount:
Gross ÷ 1.20 - VAT Portion:
Gross − Net(orGross ÷ 6) - Example: For £1,200 gross, divide £1,200 ÷ 1.20 = £1,000 net (£200 VAT).
📌 2026 VAT Registration Threshold: For the 2025/26 and 2026/27 financial years, UK businesses must register for VAT with HMRC if their taxable turnover exceeds £90,000 in any 12-month rolling period.
Frequently Asked Questions
How do you calculate 20% VAT in the UK? +
To add 20% VAT, multiply the net price by 1.20. To remove 20% VAT from a gross price, divide by 1.20. The VAT fraction for 20% is 1/6th of the gross total.
What is the difference between zero-rated and exempt goods? +
Zero-rated goods have 0% VAT charged to customers, but the business can reclaim VAT on its expenses. Exempt supplies cannot have VAT charged, and the business cannot reclaim VAT on associated purchases.
How much VAT is on £1,000 in the UK? +
If £1,000 is net of VAT, the 20% VAT is £200 (Total £1,200). If £1,000 includes VAT (gross), the VAT amount is £166.67 and the net amount is £833.33.