How much is VAT in UK? The standard UK VAT rate is 20%, while a reduced rate of 5% and a zero rate of 0% apply to certain goods and services. Some transactions are exempt. For a standard-rated item costing £100 before VAT, the tax is £20 and the total is £120. These are the current rates as of 8 September 2026, according to GOV.UK’s VAT rates guidance.
For readers in Spain, the practical questions go beyond the percentage: does the displayed price include tax, can tourists claim a refund, and what happens when a British retailer ships an order to Spain? Each situation needs a different answer.
How much is VAT in UK on everyday purchases?
VAT stands for Value Added Tax, a tax on consumption. The rate depends on what you buy and whether the transaction meets any conditions for a lower rate.
| VAT treatment | Rate | Typical examples |
|---|---|---|
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Domestic energy and children’s car seats |
| Zero rate | 0% | Most food and qualifying children’s clothing |
| Exempt | No VAT charged | Certain financial services and property transactions |
These categories come from the government’s current rate overview. The examples are useful starting points, but a broad description such as “food” does not settle every purchase.
Most ordinary groceries qualify for zero-rating. However, alcohol, confectionery, crisps, ice cream and many drinks normally attract standard-rate VAT. Food eaten in restaurants also normally attracts the standard rate when supplied by a VAT-registered business. HMRC’s product-specific guidance explains these distinctions.
That means a supermarket basket can contain products with different VAT treatments. Applying 20% to the entire basket would give the wrong result.
Is VAT already included in UK prices?
For ordinary shopping, the displayed price includes any VAT due. You do not normally reach the till and discover another 20% added to the shelf price.
Business pricing can look different. Advertising aimed only at businesses usually excludes VAT, while material aimed at both businesses and consumers may show both figures. A separate VAT line on a receipt can simply identify tax already included in the total. GOV.UK explains where VAT appears in prices and invoices.
Look for these common labels:
- Including VAT or “inc VAT”: the stated amount already includes the tax.
- Excluding VAT or “ex VAT”: add the applicable VAT to find the total.
- “Plus VAT”: the tax comes on top of the quoted amount.
For example, a standard-rated service advertised at £250 plus VAT costs £300. A £250 VAT-inclusive price remains £250; it already contains approximately £41.67 in VAT.
When comparing quotations, put both on the same basis. Comparing an exclusive price with an inclusive price can make one supplier appear cheaper than it actually is.
How to calculate VAT correctly
The calculation depends on whether your starting figure includes tax. The net price means the amount before VAT; the gross price means the total after VAT.
Adding VAT to a price
Multiply the net price by the rate to calculate the tax, then add it to the original amount.
At 20%:
Total price = net price × 1.20
At 5%:
Total price = net price × 1.05
| Price before VAT | VAT rate | VAT amount | Total payable |
|---|---|---|---|
| £50 | 20% | £10 | £60 |
| £100 | 20% | £20 | £120 |
| £250 | 20% | £50 | £300 |
| £100 | 5% | £5 | £105 |
| £100 | 0% | £0 | £100 |
These are illustrative calculations, assuming the stated rate applies to the whole purchase.
Finding VAT within an inclusive price
To remove 20% VAT, divide the total by 1.20:
Price before VAT = total price ÷ 1.20
For a £120 purchase, that produces a net price of £100. Subtracting £100 from £120 gives £20 VAT.
A useful shortcut is to divide a standard-rated VAT-inclusive total by six. For example, £600 ÷ 6 gives £100 VAT, leaving a £500 net price.
Do not subtract 20% from the total. Taking 20% off £120 produces £96, which is incorrect because VAT was calculated on the original £100.
For a 5% VAT-inclusive total, divide by 1.05 to find the net amount. The VAT component is the total divided by 21.
Zero-rated and exempt purchases are different
A zero-rated sale remains a taxable sale, but its VAT rate is 0%. An exempt sale falls into a separate category.
For consumers, both can mean no VAT charge on the purchase. For businesses, however, the distinction affects accounting and tax recovery. A VAT-registered business can generally reclaim eligible VAT on costs supporting taxable sales, including zero-rated sales. Costs relating to exempt sales generally do not carry the same recovery entitlement. HMRC’s guidance on charging and reclaiming VAT explains the basic rules.
This is why an invoice showing no VAT does not necessarily mean the seller made a mistake. The transaction’s classification and the supplier’s registration status both matter.
Can visitors from Spain claim a UK VAT refund?
A Spanish resident visiting London, Edinburgh or Cardiff should not expect a tourist VAT refund on purchases carried home in their luggage.
Under the current rules, shops in Great Britain—England, Scotland and Wales—can offer tax-free goods when they deliver them directly to an address outside the UK. The retailer must offer that service. Buying an item and taking it home yourself is a different arrangement. GOV.UK’s tax-free shopping guidance sets out the conditions.
Northern Ireland has a separate visitor refund system. Its ordinary visitor eligibility rules require residence outside Northern Ireland and the EU. A visitor normally resident in mainland Spain therefore does not qualify on that basis.
For an expensive purchase, clarify the delivery arrangement before paying. A shop’s willingness to ship abroad can matter more than your nationality or the passport you carry.
What if a UK shop delivers an order to Spain?
An online order sent from Great Britain to mainland Spain involves export and import rules, rather than simply adding UK VAT.
A British seller can zero-rate a qualifying export if it meets the relevant conditions and retains the necessary evidence. That does not make the order free of all taxes. HMRC’s export guidance explains the UK side.
For goods entering the EU from outside it, import VAT can apply. Depending on the arrangement, the seller may collect VAT at checkout, or the postal operator or courier may collect it during importation. Customs charges and handling fees can also affect the amount payable. The European Commission’s online shopping guidance explains these possible costs.
Before ordering, check where the goods physically ship from, whether the checkout includes destination taxes, and whether the carrier will request further payment. A British website address alone does not establish the shipment’s tax treatment.
When must a business register for VAT?
For a UK-established business, compulsory registration generally applies when taxable turnover exceeds £90,000 over the previous 12 months, or when it expects to exceed £90,000 in the next 30 days alone. Businesses below the threshold can register voluntarily. GOV.UK’s registration guidance confirms these tests.
Turnover means sales value, not profit. The backward-looking test uses a rolling 12-month period, so checking only at the end of a calendar or accounting year can miss the registration point. Zero-rated sales also count towards taxable turnover.
Businesses based in Spain should not assume this threshold protects them from UK registration. Overseas businesses making taxable UK supplies can face registration requirements without that turnover allowance; the precise treatment depends on the transaction.
For shoppers, the useful final check is simpler: establish the applicable rate, confirm whether the price includes it, and check delivery taxes separately when buying across borders.
How much is VAT in UK on a £100 purchase?
If £100 is the price before VAT, adding the standard 20% rate brings the total to £120. If £100 already includes VAT, the tax portion is £16.67.
Does the UK charge different VAT rates for Spanish visitors?
No. Being a visitor from Spain does not change the VAT rate on an ordinary UK shop purchase. The rate depends on the goods or services.
Is zero-rated VAT the same as VAT-exempt?
No. Zero-rated sales are taxable at 0%, while exempt sales have a different tax classification. This distinction affects a business’s ability to reclaim VAT on related costs.
Can I calculate UK VAT by subtracting 20% from the total?
No. To remove standard-rate VAT from an inclusive price, divide the total by 1.20. Subtract that result from the total to find the VAT amount.
Does a VAT-free UK export mean no tax is payable in Spain?
No. A qualifying export may carry no UK VAT, but import VAT and other applicable charges can still arise when the goods reach Spain.
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