UK VAT calculator 2026

Mandatory registration is triggered when taxable turnover in any rolling 12-month period exceeds £90,000. You must notify HMRC within 30 days of the end of the month in which the threshold was crossed, and the registration becomes effective from the first day of the second month after crossing. You must also register immediately if you expect taxable turnover to exceed £90,000 in the next 30 days alone.

Both categories charge 0% VAT to the customer, but they are not the same. Zero-rated supplies (such as most food, children's clothing, and books) are technically taxable, so you can reclaim the VAT you pay on related business costs. Exempt supplies (such as financial services, insurance, and most residential rents) are outside the VAT system, meaning you cannot reclaim input VAT on costs that relate to them. The calculator covers taxable supplies only.

You may apply to deregister if you expect your taxable turnover in the next 12 months to fall below the deregistration threshold of £88,000. This is deliberately set £2,000 below the registration threshold to avoid businesses oscillating in and out of registration. Deregistration is voluntary below that level; HMRC will cancel your registration from the agreed date.

The Flat Rate Scheme (FRS) simplifies VAT accounting: instead of calculating output tax minus input tax, you pay a fixed percentage of your gross (VAT-inclusive) turnover to HMRC. The percentage varies by business sector. Eligibility requires taxable turnover of no more than £150,000 (excluding VAT). The scheme can reduce paperwork but is not always financially beneficial, so compare the FRS rate for your sector against your actual input VAT before joining.

For the standard rate (20%), divide the gross price by 6 to find the VAT element (because VAT is 20% of the net, which equals 1/6 of the gross). For the reduced rate (5%), divide the gross price by 21. You can verify: net equals gross minus that amount, and net multiplied by the rate equals the same VAT figure.