Add VAT to a net price or strip VAT from a gross price, at any of the UK rates (20% standard, 5% reduced, 0% zero). Plus a registration-threshold check and a flat-rate vs standard scheme comparison for small businesses.
Net (excluding VAT)
£0.00
VAT amount
vat">£0.00
Gross (including VAT)
£0.00
Net amount
£0.00
VAT (20%)
£0.00
Gross total
£0.00
How VAT-inclusive vs VAT-exclusive works. A "net" price excludes VAT; a "gross" price includes it. To remove 20% VAT from a £120 gross price, divide by 1.2 (= £100 net). To add 20% VAT to a £100 net price, multiply by 1.2 (= £120 gross). Many B2C invoices show only the gross price; B2B invoices typically show net + VAT separately.
The thresholds for 2026/27. VAT registration is compulsory if your rolling 12-month UK taxable turnover exceeds £90,000, OR if you expect it to in the next 30 days. The deregistration threshold is £88,000. Below £90,000 you can register voluntarily — sometimes worth it if your customers are VAT-registered (you reclaim input VAT) but rarely worth it if they're consumers (you have to add 20% to your prices).
Flat-rate scheme in plain English. Instead of charging 20% VAT on sales and reclaiming input VAT on purchases, you charge 20% VAT on sales and pay HMRC a flat percentage of your VAT-inclusive turnover (e.g. 14.5% for IT consultants). You keep the difference. Best when your business has low VAT-able expenses. Limited cost traders pay a higher 16.5% rate that often makes the scheme not worth it.
What VAT actually covers
Standard rate (20%)
The default rate. Applies to most goods and services: clothes (adult), restaurants, alcohol, electronics, professional services.
Reduced rate (5%)
Domestic energy, children's car seats, women's sanitary products (now 0% from 2021), some renovations, mobility aids for the elderly.
Zero rate (0%)
Most food (not restaurant meals or hot takeaway), books and newspapers, children's clothes, public transport, prescriptions. Different from "exempt" — zero-rated supplies can still recover input VAT.
Exempt
Insurance, education, health, postal services, financial services. No VAT charged AND no input VAT recoverable. Different from zero-rated.
Outside scope
Wages, interest, dividends, sales between non-VAT-registered businesses, statutory fees. Not VAT relevant at all.
Place of supply rules
For digital and B2B services to overseas customers, the "place of supply" rules can shift the VAT obligation outside the UK. Specialist tax advice is wise once any cross-border element appears.