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VAT Calculator
Need a quick and easy way to figure out VAT? Our VAT calculator is here to help! With the 20% VAT rate for the United Kingdom already built in, you can save time and avoid mistakes.
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This VAT calculator is designed to help business owners work out VAT for the goods and/or services you sell. Feel free to bookmark this page.
Whether you're running a business, sorting invoices, or just double-checking a receipt, this handy tool makes it simple to calculate VAT-inclusive or exclusive amounts in seconds. With the 20% standard VAT rate already built in, you can save time and avoid mistakes. Try our free online VAT calculator now and take the hassle out of managing VAT!
What is VAT?
VAT stands for Valued Added Tax in the UK. It’s collected by businesses on behalf of HMRC. Business owners should be familiar with the VAT legislation, including the applicable VAT rate for the products or services they supply, how to calculate VAT, how to register for VAT, and how to prepare and file VAT returns.
How much is VAT?
The standard VAT rate is 20% added to the goods and/or services you sell in the UK. However, a reduced rate (5%) and a rate of 0% may apply to certain goods or services, and in certain situations, products or services may be VAT exempt.
For example, domestic fuel and power, and energy-saving materials have a 5% reduced VAT rate; most food and drink, books and newspapers, children's clothes and prescription medications have a VAT rate at 0%.
It’s important to note that even though goods or services with 0% VAT don't have VAT charged VAT on the in their sale price, you still need to report these sales in your VAT returns and they do still count towards your taxable turnover for VAT purposes.
Some examples of VAT-exempt products or services include insurance, finance and credit, education and training and fundraising events for charity. These items do not count towards your taxable turnover for VAT purposes.
How to calculate VAT in the UK
There are a couple of formulas you need to remember when calculating VAT.
To calculate a VAT inclusive price, multiply the price of goods and/or services by 1.2. For example, if the sale price of your good is £100, the VAT inclusive price is £120 (£100 * 1.2).
To calculate an VAT exclusive price, divide the price of goods and/or services by 1.2. For example, if the total sale price of your service is £225, the VAT exclusive price is £187.5 (£225/1.2).
This may seem simple to work out VAT, however, mistakes can be easily made - use this online VAT calculator to be error free!
What goods and services don’t have VAT added?
If the seller is not registered for VAT, they won’t add 20% VAT on top of their sale prices. Types of goods and services that don’t have VAT added include:
- Financial services e.g., loan and mortgage, interest, bank fees, currency exchange
- Residential rent
- Donated goods and services
- Duty-free goods
- Exported goods (we’ll explain it further later)
It's always best to consult with a tax professional or refer to the HMRC's detailed guidance if you have specific questions about whether a particular good or service is exempt from VAT or what VAT rate to charge.
How to register for VAT
In the UK, the VAT registration threshold is £90,000 per year. If your business’s taxable turnover exceeds this level in the last 12 months, or you expect your annual turnover to exceed this level in the next 30 days, you’re required to register for VAT. If your business’s taxable turnover doesn’t meet the VAT registration threshold, becoming VAT-registered is voluntary.
There are two ways to register for VAT:
- Online: you can choose to register for VAT online, follow these simple steps on the HMRC's website
- Via your accountant or tax agent: for example, Beany takes care of it for you if you need, or decide to, register for VAT.
Once you’ve become VAT registered, you need to meet your responsibilities, these include:
- Charge VAT on your taxable goods or services
- File your VAT returns
- Pay the VAT you owe to HMRC
- Keep records
If you are VAT registered, you can claim back the VAT you incur when purchasing goods or services for your business. As long as the purchase has been made for use within your business, you can reclaim VAT on anything on which VAT has been charged. If any items are also for personal use, you can only claim the business proportion of the VAT.
To make a VAT reclaim you must keep the VAT invoice or receipt and be prepared to present this to HMRC if requested.
You may be able to reclaim VAT on goods or services purchased before your VAT registration if the purchases were made within the following timeframes:
- 4 years for goods that you still have or that were used to produce other goods you still retain.
- 6 months for services.
VAT can only be reclaimed on purchases made for the business that is now VAT-registered. These purchases must be related to your business activities, meaning they should directly support the VAT-taxable goods or services you supply.
If you’d like to quickly calculate the VAT inclusive or exclusive prices for business expenses, jump straight to our VAT calculator above. If you’re not sure whether you can claim back VAT on certain items, please don’t hesitate to contact us on support@beany.uk if you’re a client. If you’d like to discuss how we can help your business accounting and VAT, book a meeting with one of our team members.
When is VAT due in the UK?
Your VAT return and payment due dates are usually one calendar month and 7 days after the end of your VAT quarter.
For example, if your VAT quarter ends on 31st of January, your VAT return and payment are due by 7th of March. Check out our tax calendar for VAT due dates and mark it as important on your calendar.