£
⚡ Quick Lookup — Common Amounts (20% VAT)
£50+ £10 VAT = £60
£100+ £20 VAT = £120
£250+ £50 VAT = £300
£500+ £100 VAT = £600
£1,000+ £200 VAT = £1,200
£5,000+ £1,000 VAT = £6,000
£10,000+ £2,000 VAT = £12,000
£25,000+ £5,000 VAT = £30,000
UK VAT Rates Explained
Value Added Tax (VAT) is a consumption tax charged on most goods and services in the UK. HMRC sets three VAT rates:
| Rate | Percentage | Applies To |
|---|---|---|
| Standard Rate | 20% | Most goods and services — electronics, clothing, furniture, restaurant meals, professional services, petrol |
| Reduced Rate | 5% | Home energy (gas, electricity), children's car seats, smoking cessation products, energy-saving materials, sanitary products |
| Zero Rate | 0% | Most food & drink, children's clothing, books & newspapers, public transport, new-build residential property, prescription medicines |
💡 The "Zero Rate" isn't the same as "VAT Exempt". Zero-rated goods ARE subject to VAT — just at 0%. This means businesses selling zero-rated goods can still reclaim VAT on their purchases. VAT-exempt businesses cannot.
VAT Registration Threshold 2025/26
You must register for VAT if your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period (increased from £85,000 in April 2024). You can also voluntarily register below this threshold.
Why voluntarily register?
- Reclaim input VAT: Get back VAT on business purchases
- Appear more professional: A VAT number signals an established business
- B2B advantage: Business customers can reclaim the VAT you charge
VAT Schemes for Small Businesses
| Scheme | Eligibility | Benefit |
|---|---|---|
| Flat Rate | Turnover ≤ £150K | Pay a fixed % of gross turnover — simpler accounting |
| Cash Accounting | Turnover ≤ £1.35M | Pay VAT when customers pay you (not when you invoice) |
| Annual Accounting | Turnover ≤ £1.35M | One VAT return per year instead of quarterly |
⚠️ eBay & online sellers: If you sell on eBay, Amazon, or Etsy, these sales count towards the £90,000 VAT threshold. HMRC has been increasingly targeting online sellers for VAT compliance. Keep accurate records from day one.
How VAT Calculation Works
Adding VAT
To add 20% VAT to a price: multiply by 1.20
Example: £100 × 1.20 = £120 (of which £20 is VAT)
Removing VAT
To remove 20% VAT from a price: divide by 1.20
Example: £120 ÷ 1.20 = £100 net (VAT was £20)
Finding Just the VAT Amount
From a gross (VAT-inclusive) price: divide by 6
Example: £120 ÷ 6 = £20 VAT
💡 Quick mental maths: To find 20% VAT on any amount, just divide by 5. £100 ÷ 5 = £20 VAT. To find VAT in a price that already includes VAT, divide by 6 instead.
VAT on Common Items
| Item | VAT Rate | Notes |
|---|---|---|
| Takeaway hot food | 20% | Fish & chips, pizza, etc. |
| Cold takeaway food | 0% | Sandwiches, salads (if cold) |
| Restaurant meals | 20% | Eat-in always 20% |
| Supermarket food | 0% | Most staple food items |
| Crisps & sweets | 20% | Counted as "luxury" food |
| Children's clothes | 0% | Under age 14 sizes |
| Adult clothing | 20% | Standard rate |
| Books (print) | 0% | Also newspapers & maps |
| E-books | 0% | Changed from 20% in 2020 |
| Electricity & gas | 5% | Domestic energy |
| Petrol & diesel | 20% | Plus fuel duty on top |
| Insurance | Exempt | Not zero-rated — exempt |
| Postage stamps | 0% | Royal Mail only |
| Private education | 20% | Changed from exempt in 2025 |
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