Guide · updated 2026-09-15

How to Calculate VAT in the UK (20%, 5% and 0%)

UK VAT explained: the 20% standard rate, 5% reduced rate and zero rate, with calculation examples for each.

The three UK VAT rates

The UK standard rate is 20% and covers most goods and services. A reduced rate of 5% applies to things like home energy and child car seats. Many essentials — most food, children's clothes, books — are zero-rated at 0%, which is different from being exempt.

Example at 20%

A sofa costs £800 before VAT. Gross = 800 × 1.20 = £960, including £160 VAT. From a £960 price tag: 960 ÷ 1.20 = £800 net.

Example at 5%

A £200 energy bill before VAT becomes 200 × 1.05 = £210. Backwards: 210 ÷ 1.05 = £200 net, so the VAT is £10.

Zero-rated vs exempt

Zero-rated (0%) still counts as taxable turnover, so a business can reclaim input VAT. Exempt supplies, like insurance or finance, do not allow VAT recovery. The calculation is trivial — multiply by 1.00 — but the paperwork difference matters.

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Quick answers

What is VAT in the UK?

20% standard, 5% reduced for items like home energy, and 0% zero rate for essentials like most food and children's clothes.

How do I remove 20% UK VAT from a price?

Divide the VAT-inclusive price by 1.20. For example, £120 ÷ 1.20 = £100 net.

Keep reading

How to Calculate VAT: Add or Remove It in Two StepsLearn how to calculate VAT with simple formulas: add VAT to a net price or extract it from a gross price, with worked examples.VAT-Inclusive Price Calculation: Get the Net in One DivisionHow to extract the net price and VAT amount from any VAT-inclusive price, with the exact formula and examples at 19%, 20% and 21%.How to Calculate VAT in Germany (19% and 7% Rates)Germany's Mehrwertsteuer explained: when the 19% standard rate and 7% reduced rate apply, with exact calculation examples.