What is the UK VAT rate in 2025?

The UK has three VAT rates in 2025-26. The standard rate is 20% and applies to most goods and services. The reduced rate is 5% and covers domestic energy, children's car seats, and some energy-saving materials. The zero rate (0%) applies to essentials including most food, books, children's clothing, and public transport. Some supplies are VAT-exempt entirely, meaning no VAT is charged and input VAT cannot be reclaimed.

What is the VAT registration threshold in 2025?

The VAT registration threshold for 2025-26 is £90,000 of taxable turnover in any rolling 12-month period. This is the highest VAT registration threshold in the world. Once you exceed this, you have 30 days from the end of the month in which you crossed the threshold to register with HMRC. You can also register voluntarily below the threshold — useful if you have significant VAT-bearing costs you want to reclaim.

What is the difference between zero-rated and VAT-exempt?

This is one of the most misunderstood distinctions in UK VAT. Zero-rated supplies are technically taxable at 0% — the business is inside the VAT system, must include them on VAT returns, and crucially can reclaim input VAT on related costs. Exempt supplies are outside the VAT system entirely — no VAT is charged, but the business also cannot reclaim input VAT on costs associated with making those exempt supplies.

How does the VAT return work?

VAT-registered businesses submit a VAT return to HMRC, typically quarterly via Making Tax Digital (MTD) software. You report all output VAT (VAT you charged on sales) and input VAT (VAT you paid on business purchases). If output exceeds input, you pay the difference to HMRC. If input exceeds output — for example in a quarter with large capital investment — HMRC refunds the difference, usually within 30 days.

Can I reclaim VAT on business purchases?

Yes, if you are VAT-registered you can reclaim VAT on goods and services purchased for business use. You need a valid VAT invoice from a VAT-registered supplier. You cannot reclaim VAT on purchases used for private purposes, entertainment, or purchases related to exempt supplies. The reclaim is made via your quarterly VAT return as input tax.

UK VAT Calculator 2025

VAT (Value Added Tax) is charged on most goods and services sold in the UK at three rates: 20% standard, 5% reduced, and 0% zero rate. There is also a category of VAT-exempt supplies — an important distinction, because zero-rated and exempt are not the same thing. Zero-rated businesses can still rec...

UK VAT CALCULATOR

Mode

VAT Rate

Net Amount (ex-VAT)

LIVE DIAGRAM

Enter an amount to see the VAT breakdown

Created with❤️byeaglecalculator.com

UK VAT RATES 2025

RATE	%	APPLIES TO	EXAMPLES
Standard	20%	Most goods and services	Electronics, clothing, hospitality, professional services
Reduced	5%	Specific essential goods	Domestic energy, children's car seats, mobility aids, energy-saving materials
Zero	0%	Essential items	Most food, books, newspapers, children's clothing, public transport, prescriptions
Exempt	N/A	Outside VAT system	Financial services, insurance, education, healthcare, residential rent

Registration threshold 2025-26: £90,000 taxable turnover · Zero-rated ≠ Exempt (zero-rated can reclaim input VAT)

HOW TO USE

1
Choose Add VAT (net → gross), Remove VAT (gross → net), or VAT Return (output minus input).
2
Select the VAT rate: Standard 20% for most goods and services, Reduced 5% for domestic energy and car seats, Zero 0% for food, books and children's clothing.
3
Enter the amount — net price for Add VAT, gross price for Remove VAT, or sales and purchases figures for VAT Return.
4
See the VAT amount, gross/net split, and for VAT Return mode — exactly what you owe HMRC or will reclaim this quarter.

WORKED EXAMPLE

Add VAT: Consultant charges £800 net + 20% VAT. VAT = £800 × 0.20 = £160. Invoice total = £960. Remove VAT: Client pays £960 gross. Ex-VAT = £960 ÷ 1.20 = £800. VAT portion = £960 − £800 = £160. VAT Return: Quarterly sales £50,000 ex-VAT → output VAT £10,000. Purchases £20,000 ex-VAT → input VAT £4,000. VAT payable to HMRC = £10,000 − £4,000 = £6,000. If purchases exceed sales (e.g. capital investment quarter), HMRC issues a refund.

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HMRC 2025-26 VAT rates · Registration threshold £90,000 · For informational purposes only · Not a substitute for professional tax advice · Last updated: 25 April 2026