# VAT Calculator (United Kingdom)

LAST UPDATE: September 25th, 2020

## Definition – What is VAT?

As a value-added tax, only the final consumer pays the VAT – purchases by business at other stages of production do not pay VAT (they are charged VAT, however, those charges act as a credit against the VAT they charge).

## Rates

The UK has 3 different VAT rates. The UK government maintains a list of VAT rates by item.

Standard VAT – 20% – This rate covers most goods and services.

Reduced Rate – 5% – This category contains items such as mobility aids, car seats for children, fuel and power, and a variety of household power devices (such as solar power and boilers).

Zero Rate – 0% – This category contains items such as exports to non-EU countries, books & newspapers, and children’s clothing and shoes.

## Formula – How to calculate VAT

VAT is calculated by multiplying the VAT rate (20% standard rate in the UK) by the total pre-tax cost. The cost of VAT is then added to the purchase.

Example: £75 of goods x 20% VAT = £15 VAT

£75 of goods + £15 VAT = £90 total

## Formula – How to calculate reverse VAT

To find the VAT from a total, divide the total amount by the VAT rate divided by 100 and plus 1.

Example: £70 total (with VAT) at 20% VAT rate

(20% / 100) + 1 = 0.20 + 1 = 1.20

£70 / 1.20 = £58.33 cost before VAT

## VAT refunds (tourism & business)

Non-EU travelers are eligible for a VAT refund. For details see the UK government page on tax-free shopping.

Businesses are eligible to reclaim their costs that include VAT. For more information and how to register see the UK government page on reclaiming VAT.