VAT calculator
Add VAT to a quote, take it out of a receipt, and see what the flat rate scheme would keep or cost on a year’s turnover.
Rates for the 2026/27 tax year. Checked 6 November 2026.
| Net | £1,000.00 |
|---|---|
| VAT | £200.00 |
| Gross | £1,200.00 |
| You invoice, with 20% VAT | £132,000.00 |
|---|---|
| Standard scheme pays HMRC (no input VAT) | £22,000.00 |
| Flat rate scheme pays HMRC at 14.5% of gross | £19,140.00 |
| Flat rate keeps | £2,860.00 |
The flat rate surplus is taxable company income. If you reclaim much input VAT, the standard scheme usually wins.
Adding and removing VAT
To add 20% VAT, multiply the net by 1.2. To take it out of a gross figure, divide by 1.2; the VAT is the difference, not 20% of the gross. £120 gross holds £20 of VAT, not £24.
How the flat rate scheme works
You still charge clients 20% but pay HMRC a flat percentage of VAT-inclusive turnover and reclaim no input VAT, except on capital goods over £2,000. IT consultancy pays 14.5%, less 1% in the first year, which leaves a surplus when your VAT-able costs are small. Most of that surplus goes if you are a limited cost trader (goods under 2% of turnover or under £1,000 a year), because you then pay 16.5%. Check your spend on goods against that test before you join.
When this calculator is wrong for you
- Your turnover is over £150,000 ex-VAT, so you cannot join the flat rate scheme.
- You reclaim significant input VAT; the comparison assumes none.
- You sell zero-rated or exempt services.
Questions people ask
What is the flat rate VAT percentage for IT contractors?
14.5% for computer and IT consultancy. Management consultancy is 14%, limited cost traders pay 16.5% whatever the trade, and HMRC publishes the full list by trade.
What is the VAT registration threshold?
£90,000. You must register when taxable turnover in any rolling 12 months passes £90,000, or you expect it to within 30 days.
Is the flat rate surplus taxable?
Yes, it is company income for corporation tax.
Do I charge VAT to overseas clients?
Usually not for business clients outside the UK, but the place of supply rules decide. Check before you invoice.
How this is worked out
Add: VAT equals net multiplied by the rate; gross equals net plus VAT. Remove: net equals gross divided by one plus the rate; VAT is the remainder. Flat rate comparison: the standard scheme pays 20% of net turnover (assuming no input VAT); the flat rate scheme pays your flat percentage of the VAT-inclusive turnover. Rounded to the penny.
Full formulas, rounding rules and test cases are on the methodology page. Every rate update is listed in the changelog.