The standard UK VAT rate in 2026 is 20%. To add VAT, multiply the net price by 1.20 (£100 → £120); to remove VAT, divide the gross price by 1.20 (£120 → £100, so £20 was VAT). VAT (Value Added Tax) is a consumption tax charged on most goods and services and collected by VAT-registered businesses on behalf of HMRC.
The three UK VAT rates
- Standard — 20%: most goods and services.
- Reduced — 5%: domestic gas and electricity, children's car seats, some energy-saving materials.
- Zero — 0%: most food, books and newspapers, children's clothing, and public transport. (Zero-rated is still "taxable" at 0%, which differs from "exempt".)
How to add VAT
Net price × 1.20 = gross price. The VAT itself is net × 0.20.
- £100 + 20% VAT = £120 (VAT = £20)
- £250 + 20% VAT = £300 (VAT = £50)
Do it instantly: add 20% to £100 or any amount with the VAT calculator.
How to remove VAT (work out the net)
Gross price ÷ 1.20 = net price. The VAT is the difference. A common mistake is subtracting 20% of the gross — that's wrong, because the 20% was added to the net, not the gross.
- £120 inc. VAT → £120 ÷ 1.20 = £100 net, VAT £20
- £60 inc. VAT → £60 ÷ 1.20 = £50 net, VAT £10 — see remove VAT from £60
The VAT registration threshold
A business must register for VAT once its taxable turnover passes the registration threshold (£90,000 over a rolling 12 months as of the latest HMRC figures). Below that, registration is voluntary — sometimes worth it to reclaim input VAT. Once registered, you charge VAT on sales and reclaim VAT on eligible purchases, paying HMRC the difference.
VAT vs US sales tax
VAT is charged and collected at every stage of the supply chain (with businesses reclaiming what they pay), and prices shown to consumers usually include it. US sales tax is added once at checkout and varies by state. Canada uses GST/HST, which works much like VAT.
Frequently asked questions
- What is the UK VAT rate in 2026? 20% standard, 5% reduced, 0% zero-rated.
- How do you add 20% VAT? Multiply the net price by 1.20.
- How do you remove VAT? Divide the gross price by 1.20 — not subtract 20%.
General information, not tax advice. Confirm current thresholds and rates with HMRC.