BillmanWhat is VAT?
VAT (Value Added Tax) is a tax on spending. It is added to the price of most goods and services at each step from maker to shop to customer, and the final customer pays it in the price.
A VAT-registered business charges VAT on its sales (output VAT) and pays VAT on its purchases (input VAT). It sends the tax authority the difference. So each business only pays tax on the value it adds, and the full tax lands on the end customer.
How to use this VAT calculator
- Choose the country. The rates, currency and registration threshold change with it.
- Pick what you know: the net price (without VAT), the gross price (with VAT), or only the VAT amount.
- Type the amount and pick the VAT rate, or type any other rate in the “Other” box.
- The net price, VAT and gross price update as you type. Copy the result, or copy a link that opens with the same numbers.
- Use the Bill tab to add several items at different rates, and the Register? tab to check if your turnover means you must register.
UK VAT rates
| Rate | VAT | Common examples |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Home energy (gas and electricity), children’s car seats, some energy-saving products |
| Zero | 0% | Most food, children’s clothes and shoes, books and newspapers |
| Exempt | No VAT | Insurance, most financial services, education, health services, postage stamps |
Check an item’s rate on GOV.UK (“VAT rates on different goods and services”).
Zero-rated and exempt are not the same
Zero-rated sales are taxable at 0%. They count towards the registration threshold, and you can reclaim the VAT you paid on what you bought to make them.
Exempt sales are outside VAT altogether. They do not count towards the threshold, and you usually cannot reclaim the VAT on purchases used for them.
When do you need to register for VAT in the UK?
- You must register when your VAT-taxable turnover goes over £90,000 in any rolling 12 months.
- You must also register if you expect to go over £90,000 in the next 30 days alone.
- You can register voluntarily below the threshold, for example to reclaim VAT on purchases.
- You can ask to deregister if your taxable turnover is expected to fall below £88,000.
- Registered businesses keep digital records and file VAT returns, usually every quarter, with Making Tax Digital software.
VAT in the UAE, Saudi Arabia, Oman and Bahrain
| Country | Standard rate | VAT since | Must register over (12 months) |
|---|---|---|---|
| UAE | 5% | 1 Jan 2018 | AED 375,000 |
| Saudi Arabia | 15% | 1 Jan 2018 (15% since 1 Jul 2020) | SAR 375,000 |
| Oman | 5% | 16 Apr 2021 | OMR 38,500 |
| Bahrain | 10% | 1 Jan 2019 (10% since 1 Jan 2022) | BHD 37,500 |
Each country also has a 0% rate for some supplies, such as exports. Check the details with the country’s tax authority.
The most common VAT mistake
To take VAT out of a price, do not subtract 20%. £120 minus 20% is £96, which is wrong. The VAT was added to the net price, not taken from the gross, so divide instead: £120 ÷ 1.2 = £100, and the VAT is £20. This calculator does that for you.