Add or remove UK VAT at the standard (20%), reduced (5%), or zero rate.
Most goods and services in the UK carry standard-rate VAT at 20%. Some items (like home energy) get the reduced 5% rate, and some (like most food and children's clothes) are zero-rated. Choose whether you're adding VAT to a net price or removing it from a VAT-inclusive price.
Illustrative estimate only, using simplified/rounded 2026/27 UK figures — not tax advice. Always confirm with HMRC or a qualified UK tax adviser.
VAT (Value Added Tax) is the UK's main consumption tax, charged at three rates: the standard rate of 20% on most goods and services, a reduced rate of 5% on specific items like domestic energy and children's car seats, and a zero rate on essentials like most food, books, and children's clothing — zero-rated is different from exempt, since zero-rated businesses can still reclaim VAT on their own costs. Businesses only need to register for VAT once taxable turnover exceeds the registration threshold, below which charging VAT is optional.
VAT is ultimately paid by the end consumer, but it is collected in stages: registered businesses charge VAT on sales (output tax) and reclaim VAT paid on business purchases (input tax), remitting only the difference to HMRC. This is why VAT does not compound through a supply chain even though it is applied at every stage from raw materials to final sale.
Zero-rated goods are technically taxable at 0%, so the business can still reclaim VAT on its related costs. Exempt goods are outside the VAT system entirely, meaning the business cannot reclaim VAT on costs related to those exempt sales — a meaningful difference for business accounting even though the customer pays no VAT either way.
Once taxable turnover exceeds the current VAT registration threshold in any rolling 12-month period, registration becomes compulsory. Businesses below the threshold can register voluntarily, which is sometimes worthwhile to reclaim VAT on costs even before it is required.
Generally yes — import VAT applies to most goods brought into the UK from abroad, typically collected at the point of import or through the seller's VAT registration for online purchases, depending on the value and how the sale was arranged.
Conceptually similar in that both are consumption taxes ultimately paid by the end buyer, but VAT is collected at every stage of production with businesses reclaiming what they pay, whereas a sales tax (like in the US) is typically only charged once, at the final point of sale to the consumer.