VAT Calculator
Last updated: 27 June 2026
Reviewed by Gavin Meiring, Lead research and primary author · Doctoral Candidate (Corporate Governance) · Research and drafting assisted by AI
- VAT was invented in France in 1954 by economist Maurice Lauré. Today, over 160 countries use some form of value-added tax — the US being the largest exception.
- The UK originally introduced VAT at 10% in 1973. It's been raised twice since — to 15% in 1979, and to the current 20% in 2011.
- In Australia, the GST (their version of VAT) is 10% flat on most goods. Fresh food, medical services, and education are all exempt.
VAT Calculator
A VAT calculator adds or removes Value Added Tax from a price in seconds, showing the net amount, VAT amount, and gross total. It is used daily by UK and EU businesses, sole traders, and consumers who need to separate VAT from an invoice total or confirm the tax on a quoted price.
How to Use the VAT Calculator
- Enter the price you want to work with.
- Enter the VAT rate (20% for standard-rated UK goods, 5% for reduced-rate items, or 0% for zero-rated).
- Choose whether to add VAT to a net price, or remove VAT from a gross (VAT-inclusive) price.
- Click calculate to see the net price, VAT amount, and gross price.
The Formula
To add VAT to a net price:
VAT Amount = Net Price x (VAT Rate / 100) Gross Price = Net Price + VAT Amount
To remove VAT from a gross (VAT-inclusive) price:
Net Price = Gross Price / (1 + VAT Rate / 100) VAT Amount = Gross Price - Net Price
For 20% VAT, the VAT fraction is 1/6. Multiply any VAT-inclusive price by 1/6 to find the VAT element quickly.
Real-World Example
A contractor quotes £850 net for a job. The client needs the VAT-inclusive total for their records.
- VAT at 20%: £850 x 0.20 = £170
- Gross invoice total: £850 + £170 = £1,020
Reverse: a supplier sends an invoice for £1,020 including VAT. The accountant needs the net and VAT figures separately.
- Net price: £1,020 / 1.20 = £850
- VAT amount: £1,020 - £850 = £170
Both approaches give the same result; the direction depends on whether you start with the net or the gross figure.
UK VAT Rates Explained
The UK has three main VAT rates. The standard rate of 20% applies to most goods and services. The reduced rate of 5% applies to items such as domestic energy, children's car seats, and some home renovation work. Zero-rated (0%) goods include most food, books, newspapers, children's clothing, and public transport. Zero-rated is not the same as exempt: VAT-registered businesses can still reclaim input VAT on costs related to zero-rated supplies, whereas exempt supplies do not allow this. Common exempt categories include insurance, financial services, and most education. You must register for VAT once your taxable turnover exceeds the threshold (currently £90,000 per year in the UK) or voluntarily if your turnover is below this level.
Frequently Asked Questions
When do I need to register for VAT? You must register for VAT when your taxable turnover exceeds £90,000 in any 12-month rolling period. You can also register voluntarily if your turnover is below this figure, which can be beneficial if most of your customers are VAT-registered businesses who can reclaim the VAT you charge.
Can I reclaim VAT on business expenses? Yes, VAT-registered businesses can reclaim the VAT paid on goods and services used for business purposes. You do this through your VAT return by deducting input VAT (the VAT you paid) from output VAT (the VAT you charged customers). If your input VAT exceeds output VAT in a period, HMRC will refund the difference.
What is the Flat Rate Scheme? The VAT Flat Rate Scheme lets small businesses pay a fixed percentage of their gross turnover rather than calculating VAT on every transaction. The rate varies by business type (typically between 4% and 16.5%). It simplifies accounting but may not be beneficial if you have significant VAT-reclaimable expenses.
What is the difference between zero-rated and exempt for VAT purposes? Zero-rated supplies are taxable at 0%, meaning the business can still reclaim input VAT on related costs. Exempt supplies are outside the VAT system entirely; the business cannot charge VAT on them and cannot reclaim input VAT on costs that relate to making those supplies. If a business makes both taxable and exempt supplies, it must apportion input VAT accordingly.
Net, VAT and gross at both rates
The direction you start from changes the arithmetic, and the rate changes the fraction. For a rate of r per cent, the VAT inside a VAT-inclusive price is the fraction r divided by (100 plus r). At 20 per cent that fraction is 1/6, and at 5 per cent it is 1/21. The table below takes one net figure and one gross figure through both rates and adds the zero-rated case.
| Rate | VAT inside a gross price | VAT on a £850 net price | Gross from £850 net | Net inside a £1,020 gross price | VAT inside £1,020 gross |
|---|---|---|---|---|---|
| 20% | 1/6, or 0.166667 | £170.00 | £1,020.00 | £850.00 | £170.00 |
| 5% | 1/21, or 0.047619 | £42.50 | £892.50 | £971.43 | £48.57 |
| 0% | none | £0.00 | £850.00 | £1,020.00 | £0.00 |
The 5 per cent row shows why the fraction matters. Subtracting 5 per cent from £1,020 gives £969.00, which is wrong; the correct net is £971.43, because the 5 per cent was charged on the net figure and not on the total. The VAT element is 1/21 of the gross, which is £48.57. The same trap sits at 20 per cent, where subtracting a fifth of the gross gives £816.00 against the correct £850.00. Divide by 1.2 or by 1.05, or multiply by the fraction, and the answer comes out right.
The calculator on this page runs both directions from a single price field, with add and remove modes, and its preset buttons offer 5, 10, 15, 20 and 25 per cent. One behaviour is worth knowing before you use the zero-rated case: the component returns early when the rate is zero, so an entry of 0 per cent produces no output at all. Read the zero-rated figures from the table above instead, where the net and the gross are the same number by definition.
A mixed-rate invoice
Real invoices rarely sit at one rate, and a mixed one cannot be unwound with a single fraction. Take a builder's invoice with three lines. Labour of £1,200 is standard-rated. Energy-saving materials charged at £60 are reduced-rated. Zero-rated food in the same job comes to £95.
| Line | Net | Rate | VAT |
|---|---|---|---|
| Labour | £1,200.00 | 20% | £240.00 |
| Energy-saving materials | £60.00 | 5% | £3.00 |
| Food | £95.00 | 0% | £0.00 |
| Total | £1,355.00 | mixed | £243.00 |
The invoice total is £1,355.00 net and £1,598.00 gross. A reader who applies the 1/6 fraction to the whole gross figure gets £266.33 of VAT, which is £23.33 more than was charged, because two thirds of the net figure is not standard-rated. The fraction works line by line: the standard-rated line alone is £1,440.00 gross, and 1/6 of that is £240.00. Working back from a mixed gross total needs the rate split, which is why an invoice that mixes rates should show the VAT rate against each line rather than only the total.
The flat rate scheme in figures
A business on the VAT Flat Rate Scheme charges VAT at the standard rate on its sales but pays HMRC a fixed percentage of its gross turnover, and keeps the difference. The percentage depends on the trade, and one rule catches most service businesses: a limited cost trader pays 16.5 per cent. The test is whether goods bought for the business come to less than 2 per cent of turnover, or less than £1,000 a year. A trader with £60,000 of turnover would need £1,200 of goods to clear the 2 per cent test.
| Gross turnover | Flat rate | Paid to HMRC | Kept after the flat rate payment |
|---|---|---|---|
| £20,000 | 16.5% | £3,300.00 | £16,700.00 |
| £60,000 | 16.5% | £9,900.00 | £50,100.00 |
| £60,000 in the first year | 15.5% | £9,300.00 | £50,700.00 |
The last row applies the 1 per cent reduction HMRC gives in the first year of VAT registration, which runs until the day before the registration anniversary. The scheme itself is open to businesses with turnover of no more than £150,000 a year, and a limited cost trader in a newly registered period uses 15.5 per cent in place of the 16.5 per cent standard. Input VAT is not normally reclaimable under the scheme, so the kept figure is not profit; it has to absorb the VAT the business paid on its own purchases. A business with heavy VAT-bearing costs usually does better on standard accounting, which is the trade-off the scheme asks you to estimate before joining.
Where the rates and thresholds stand
The three UK rates used above are the published ones: 20 per cent standard, 5 per cent reduced for domestic energy and similar items, and zero for most food, books and children's clothing. The registration threshold is £90,000 of taxable turnover in any rolling twelve-month period, and voluntary registration is available below it. Zero-rated supplies remain taxable at 0 per cent, so input VAT on costs linked to them is recoverable, while exempt supplies such as insurance and most education sit outside the system and their linked input VAT is not.
Two points about the page's own figures are worth keeping in view when you use them commercially. The reduced rate covers a short list rather than a category, and the list is narrower than most people assume, so a 5 per cent line should be checked against the published list rather than against the item's general appearance. The registration threshold has moved more than once in recent years, so a figure quoted from memory is worth checking against the current published threshold before it is used to decide whether to register.
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