Question 1

What is VAT in the UK?

Accepted Answer

VAT (Value Added Tax) is a consumption tax applied to most goods and services in the UK. The standard rate is 20%, with a reduced rate of 5% for certain items like children's car seats and home energy, and a zero rate for essential items like most foods and children's clothes.

Question 2

How do I calculate VAT from a net price?

Accepted Answer

To calculate VAT from a net (excluding VAT) price, multiply the net amount by the VAT rate (e.g., 100 x 0.20 = 20). The gross price would be net + VAT (100 + 20 = 120).

Question 3

How do I calculate the net price from a gross price?

Accepted Answer

To find the net price from a gross (including VAT) price, divide by (1 + VAT rate). For example, with a 20% VAT rate: 120 / 1.20 = 100. The VAT amount would be: 120 - 100 = 20.

Question 4

When do I need to register for VAT?

Accepted Answer

You must register for VAT if your taxable turnover exceeds £90,000 (as of 2024) in a 12-month period, or if you expect it to exceed this threshold. You can also register voluntarily if your turnover is below the threshold.

UK VAT Calculator

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