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 (the threshold as of 2024, subject to change). 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.