UK VAT calculator

How vat in United Kingdom is calculated

Three rates, and the third is the one worth understanding. 20% is standard and 5% covers a reduced-rate list. But 0% is a genuine rate, not an absence of one: zero-rated sales are taxable supplies charged at nil, so they count toward your registration threshold and you can still reclaim the input tax on what you bought to make them. Exempt supplies — postage stamps, financial and property transactions — do neither. GOV.UK states the rates and the exemptions separately, and conflating them is the most consequential VAT error a small business can make.

The threshold is £90,000, and the UK measures it unusually: over a **rolling** last 12 months, not over a tax year or a calendar year. That means the test can trip in any month, and a business whose turnover is comfortably under the figure for any given year can still cross it on a twelve-month view. Every other country in this family counts by calendar year.

Adding VAT multiplies the net by the rate; removing it divides the gross by one plus the rate, so £120 gross at the standard rate is £100 net. The B2B reverse charge is exposed as an input because it is what most people mean when they ask whether they must charge VAT.