How United Kingdom VAT works
Value Added Tax (VAT) in the United Kingdom is charged at a standard rate of 20% on most goods and services. A reduced rate of 5% applies to items such as domestic fuel and power, and some supplies are zero-rated (0%) — including most food, books, and children's clothing.
To calculate VAT on a net (exclusive) price, multiply the amount by 0.20 to get the VAT, or multiply by 1.20 to get the gross total. For example, a £100 net invoice becomes £120 including VAT (£20 VAT).
To reverse-calculate VAT from a VAT-inclusive price, divide the gross by 1.20. A £120 gross price equals £100 net with £20 VAT. This reverse VAT calculation is essential when clients quote inclusive prices or when you need to extract the tax component for accounting.
UK VAT-registered businesses must show net amount, VAT amount, and gross total separately on invoices, along with their VAT registration number. Use this calculator to verify figures before creating a professional VAT invoice with InvoBuzz.
Reverse charge & inclusive prices
Under UK VAT reverse charge rules, the customer (not the supplier) accounts for VAT on certain supplies — for example some construction services and domestic reverse charge. Enter the applicable rate and use remove-VAT mode when working from a gross figure.
Invoice requirements
A UK VAT invoice must include: business name and address, VAT registration number, unique invoice number, invoice date, description of goods/services, VAT rate, VAT amount, and total including VAT.