Understanding UK VAT Rates (2026 Guide)
Value Added Tax (VAT) in the United Kingdom is a tax charged on most goods and services. As a business owner or consumer, knowing the difference between the three main rates is crucial for compliance with HMRC (His Majesty's Revenue and Customs).
1. Standard
20%Applies to most goods and services: electronics, clothing, legal services, and cars (purchase/lease).
2. Reduced
5%Children's car seats and domestic fuel and power.
3. Zero
0%Most food, books, newspapers, and children's clothes. Qualifying installations of energy-saving materials in residential accommodation are also zero-rated until 31 March 2027; materials purchased without installation do not qualify for this relief.
Rates last checked: . Source: HMRC — VAT rates.
HMRC — Energy-saving materials (VAT Notice 708/6): HMRC — Energy-saving materials (VAT Notice 708/6).
What is the VAT Reverse Charge?
The UK construction domestic reverse charge makes the customer account for VAT instead of paying it to the supplier. It applies to qualifying construction services at the standard or reduced rate when both parties are UK VAT-registered and payment for the supply is reportable under the Construction Industry Scheme (CIS).
It does not apply to zero-rated services or supplies of staff by employment businesses. Normal VAT rules apply where the customer has notified the supplier in writing that they are an end user or a qualifying intermediary supplier.
CIS status alone is not enough to determine whether the reverse charge applies. This is an accounting mechanism, not a 0% VAT rate.
Rules last checked: . Source: HMRC — construction domestic reverse charge.
💡 Tip: Save your calculations in the app for easy reference.
Gross vs. Net: How to Calculate Manually
Often, you need to work backwards to find the price before tax. Here is the math behind our tool:
The "Divide by 1.2" Rule
To convert a Gross price (Inc. VAT) to Net (Ex. VAT) at the standard 20% rate, simply divide the total by 1.2.
The "Divide by 6" Rule
To find only the VAT amount from a total price, divide the Gross amount by 6.
