Free Tool
VAT Calculator
Add or remove VAT instantly. Works with standard (20%), reduced (5%), and zero rates.
How to Calculate VAT
Adding VAT: Multiply the net amount by the VAT rate as a decimal (e.g. 0.20 for 20%) to get the VAT amount, then add it to the net price. Or simply multiply by 1.20 for the total including VAT.
Removing VAT:Divide the gross amount by 1.20 (for 20% VAT) to get the net price. Subtract the net from the gross to find the VAT amount. This is sometimes called a “reverse VAT calculation”.
UK VAT Rates for Tradespeople
Most construction and trade services are charged at the standard rate of 20%. However, some work qualifies for the reduced 5% rate — for example, installing energy-saving materials, converting a building into residential use, or renovating a dwelling that's been empty for 2+ years.
VAT Threshold for Sole Traders
As of April 2024, the UK VAT registration threshold is £90,000. If your taxable turnover exceeds this in any rolling 12-month period, you must register for VAT with HMRC. Many tradespeople choose to register voluntarily below this threshold to reclaim VAT on materials and tools.
Frequently Asked Questions
What is the current UK VAT rate?
The standard UK VAT rate is 20%. A reduced rate of 5% applies to certain goods and services such as home energy, child car seats, and some building renovations. Zero-rated items (0%) include most food, children's clothing, and books.
How do I add VAT to a price?
To add 20% VAT, multiply the net price by 1.20. For example, £100 × 1.20 = £120 including VAT. For 5% VAT, multiply by 1.05.
How do I remove VAT from a price?
To remove 20% VAT from a VAT-inclusive price, divide by 1.20. For example, £120 ÷ 1.20 = £100 net. The VAT amount is £120 - £100 = £20.
When do tradespeople need to register for VAT?
You must register for VAT when your taxable turnover exceeds £90,000 in a rolling 12-month period. You can voluntarily register below this threshold. Once registered, you must charge VAT on all standard-rated work and submit quarterly VAT returns to HMRC.
What is a reverse VAT calculation?
A reverse VAT calculation works out the net amount and VAT from a VAT-inclusive total. This is useful when you have a receipt showing the total and need to know the VAT breakdown for your records.
Does the domestic reverse charge apply to construction work?
Yes, the VAT domestic reverse charge for construction services means that CIS-registered subcontractors do not charge VAT on qualifying construction services to VAT-registered contractors. Instead, the contractor accounts for the VAT. This applies to standard and reduced rate VAT services reported under CIS.
Automate your VAT tracking
Traddie automatically calculates VAT on every quote and invoice, tracks your turnover towards the threshold, and helps you prepare VAT returns.
Try Traddie free