UK VAT rates for 2026/27
The UK has three VAT rates. The standard rate of 20% applies to most goods and services including electronics, clothing, restaurant meals, and professional services. This rate has been in place since January 2011.
The reduced rate of 5% covers essentials like domestic gas and electricity, children's car seats, and home energy-saving materials. The zero rate (0%) applies to most food, children's clothing, books, newspapers, and public transport.
| Rate | Percentage | Examples |
|---|---|---|
| Standard | 20% | Electronics, clothing, restaurants, professional services |
| Reduced | 5% | Domestic energy, children's car seats, home insulation |
| Zero | 0% | Most food, children's clothing, books, newspapers |
How to add VAT to a price
To add VAT to a net (ex-VAT) price, multiply the amount by the VAT rate and add it to the original. For the standard 20% rate: multiply by 1.2. For example, £100 × 1.2 = £120. For the reduced 5% rate: multiply by 1.05.
The formula is: Gross price = Net price × (1 + VAT rate). So for 20% VAT: Gross = Net × 1.20.
How to remove VAT from a price
To remove VAT from a gross (VAT-inclusive) price, divide by the VAT multiplier. For 20% VAT: divide by 1.2. For example, £120 ÷ 1.2 = £100. For 5% VAT: divide by 1.05.
The formula is: Net price = Gross price ÷ (1 + VAT rate). The VAT amount is then: Gross − Net.
VAT registration threshold
Businesses must register for VAT once their taxable turnover exceeds £90,000 in any rolling 12-month period. Once registered, they must charge VAT on applicable sales and can reclaim VAT on business purchases.
Voluntary registration is also possible below the threshold — useful if your customers are VAT-registered businesses who can reclaim the VAT you charge.