UK VAT (Value Added Tax) Calculator
Calculate UK Value Added Tax (VAT) at standard (20%), reduced (5%), or zero (0%) rates, extract net/gross amounts, and calculate Flat Rate Scheme (FRS) liabilities.
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Calculation Methodology & Statutory Rules
UK VAT Rules (HMRC 2026/27): 1) Standard Rate (20%): Added to Net: Gross = Net × 1.20, VAT = Net × 0.20.
Extracted from Gross: Net = Gross / 1.20, VAT = Gross × (1/6).
2) Reduced Rate (5%): Added to Net: Gross = Net × 1.05, VAT = Net × 0.05.
Extracted from Gross: Net = Gross / 1.05, VAT = Gross × (1/21).
3) Flat Rate Scheme (FRS): You charge clients 20% VAT standard on your invoices, but pay HMRC a fixed percentage of your gross turnover (including VAT).
First-year VAT registered businesses receive a 1% discount on their FRS sector rate.
4) Mandatory Registration Threshold: £90,000 taxable turnover in any 12-month period.
Deregistration threshold: £88,000.
Flat Rate Scheme join threshold: £150,000.
Frequently Asked Questions
Q1.What is the UK VAT registration threshold for 2026/27?
The compulsory UK VAT registration threshold is £90,000 of taxable turnover within any rolling 12-month period. If your taxable turnover exceeds £90,000, you must register for VAT with HMRC. The deregistration threshold is £88,000.
Q2.What are the UK VAT rates?
The UK has three main VAT rates: Standard Rate (20%) applicable to most goods and services; Reduced Rate (5%) for items like domestic fuel/power and children's car seats; and Zero Rate (0%) for most food, books, newspapers, and children's clothing.
Q3.How does the HMRC Flat Rate Scheme (FRS) work?
Under the Flat Rate Scheme, you charge your clients the standard 20% VAT on invoices, but pay HMRC a lower, fixed percentage based on your industry sector (e.g., 14.5% for IT consultants) applied to your total gross turnover. You keep the difference as profit, but generally cannot reclaim VAT on purchases (except capital assets over £2,000).
Q4.What is a Limited Cost Trader under the Flat Rate Scheme?
If a business spends less than 2% of its VAT-inclusive turnover (or less than £1,000 a year) on relevant goods (excluding services, food, vehicles, etc.), it is classified as a 'Limited Cost Trader' and must pay a high flat rate of 16.5%.
Disclaimer: Results are estimates based on standard tax rules for the 2026 tax year and are provided for informational purposes only. Individual circumstances (deductions, credits, specific state/local rules) may significantly affect your actual tax liability. Always consult a qualified tax professional or accountant for advice specific to your situation.