Startxpress | Free UK VAT RATE Calculator

FREE UK VAT RATE CALCULATOR

Invoicing clients and need how much VAT to charge? Use our simple Free VAT calculator to work out how much you should charge your clients, wherever they are in the world. Enter your amount and the rate of VAT you'll be charging, select whether you want to include or exclude VAT, and the calculator will do the rest.

Free UK VAT Rate Calculator

What is VAT?

Value Added Tax (VAT) is levied on the majority of goods and services offered by VAT-registered enterprises in the UK. It’s collected on behalf of HMRC by businesses that are VAT registered.

How to calculate VAT in the United Kingdom?

Well there are some rates you should know, rates vary according to what you’re supplying, and there are four main categories to think about:

Standard Rate

The current VAT rate stands at 20% and applies to a wide range of goods and services, covering areas such as web design services, electronics, consultancy, photography services, and numerous others. This rate is the most common VAT rate, and if it applies to your business, it is the rate you should apply when charging your customers for your products and services.

Reduced Rate

This rate is set at 5%, and it applies to items such as fuel and power used in homes and by charities, energy-efficient materials like insulation, property renovations and alterations, as well as children’s car seats. If your goods or services fit into these relevant categories, then this is the rate you will charge your customers.

Zero Rate

This indicates that your goods and services remain VAT-taxable, meaning they must still be included on your VAT return. However, the VAT rate you apply to your customers is 0%. Nevertheless, you are still required to record them in your VAT accounts and report them on your VAT return. Examples of such goods and services include food and drink for human consumption (excluding certain items like alcohol, confectionery, and restaurant and takeaway meals, which are subject to the standard rate), along with children’s shoes and clothing, books, newspapers, protective clothing, brochure printing, and animal feed.

Exempt Supplies

Certain items are entirely exempt from VAT, such as postage stamps and property transactions. Antiques and works of art, as well as physical education and sports activities, also fall within this category. If your business exclusively provides exempt services, you typically cannot register for VAT.

Rates are subject to change and you must apply changes from the date they change – and not a day later. If you’re not sure which VAT rate is appropriate it’s best to consult HMRC’s full list. Our calculator also lets you adjust the VAT rate if you need to calculate this for reduced rate items.

Should you register for VAT?

Whether you must register for VAT depends on your specific circumstances. If your turnover within a 12-month period surpasses the current £85,000 threshold, registration becomes mandatory. Failure to register incurs a penalty fine. If your turnover doesn't reach that figure, registration isn’t obligatory, but you still have the option to register VAT voluntarily if you wish.

You must register VAT when:

Your VAT taxable turnover is over the threshold in a 12-month period – that’s the total value of everything you sell that isn’t VAT-exempt.

You expect or know you will go over the threshold over a 30-day period.

When we talk about 12-month period, it means any rolling 12-month period – for example, from the start of July to the end of June.That’s different from your calender year or tax year, which represents fixed periods.

Why should you consider voluntary registration?

Businesses with a turnover below £85,000 have the option to voluntarily register, offering specific advantages for certain enterprises.

One of the main benefits is the ability to reclaim VAT on most goods or services purchased for your business. For example, if you collect £1,000 of VAT from your customers over a three-month period, and during the same period you buy something from a supplier for £200 plus VAT (totalling £240), you can reclaim the VAT.

The amount owed to HMRC is calculated by subtracting the VAT collected ("output VAT") from the VAT paid ("input VAT"). In this scenario, you would pay £960 (£1000 minus £40). Therefore, being registered for VAT leaves you £40 better off than not being registered, as you are effectively keeping this amount.

There are other advantages too:

1. It can boost your business profile, as it makes you seem bigger and more established.

2. You receive a VAT number, which you can show on websites and forms to give your business an extra professional touch.

Understanding and managing Value Added Tax (VAT) is essential for businesses in the UK. Our free UK VAT calculator simplifies the process and ensures accurate calculations for your transactions. Whether it's web design or consultancy, our tool provides clarity.

Knowing when to register for VAT, whether mandatory or voluntary, is crucial for compliance and financial planning. With StartXpress, you can register for VAT and receive comprehensive support to help you start your business in the UK. So whether you're a new entrepreneur or an established business owner, Startxpress can help you register VAT and get your UK business off to a flying start.