VAT Calculator

Use this calculator to add or remove VAT from a price at any standard or reduced rate. Essential for UK and EU invoicing, reclaiming VAT on purchases, and presenting both VAT-inclusive and VAT-exclusive prices to customers.

What this calculator does

The VAT calculator helps you add VAT to a net price or remove VAT from a gross price at any applicable rate.

It uses:

• price (net or gross)
• VAT rate

This gives you the VAT amount and the corresponding net or gross price — the figures needed for VAT-compliant invoicing, supplier reconciliation, and customer-facing pricing.

VAT Formula

VAT = Net Price × (VAT Rate ÷ 100)

Where:

• Net Price = price before VAT is added
• VAT Rate = applicable VAT percentage (UK standard is 20%)
• VAT = value added tax amount
• Gross Price = Net Price + VAT

To remove VAT from a gross price: Net Price = Gross Price ÷ (1 + VAT Rate ÷ 100)

Example calculation

If:

• Net price = 100
• VAT rate = 20%

Then:

• VAT = 100 × 0.20 = 20
• Gross price = 100 + 20 = 120

A 100 net price becomes 120 when 20% UK standard VAT is added. To work backwards: 120 ÷ 1.20 = 100 net.

What is VAT?

Value Added Tax (VAT) is a consumption tax applied at every stage of the supply chain. Each business charges VAT on its sales and reclaims VAT paid on its purchases, remitting only the net amount to the tax authority. The final consumer bears the full tax burden. VAT is used across the UK, EU, and many other countries — with rates and rules varying by jurisdiction.

UK VAT rates

The UK applies three VAT rates depending on the product or service:

• Standard rate (20%) — applies to most goods and services
• Reduced rate (5%) — applies to specific items including domestic energy, children's car seats, and some health products
• Zero rate (0%) — applies to most food, books, children's clothing, and public transport
• Exempt — some supplies (financial services, insurance, education) are outside the VAT system entirely

When to use this calculator

Use this calculator when you want to:

• add VAT to a net price for customer invoicing
• extract the net price and VAT from a VAT-inclusive total
• calculate VAT on purchases for reclaim through your VAT return
• present both net and gross prices on quotes and price lists

Common mistakes when calculating VAT

Common mistakes include:

• subtracting 20% from a gross price to find the net — 120 minus 20% gives 96, not 100
• applying the standard rate to items that qualify for reduced or zero rating
• forgetting that VAT registration is only required above the UK threshold (currently £90,000 in taxable turnover)
• confusing zero-rated supplies with exempt supplies — zero-rated allow VAT reclaim, exempt do not

VAT vs sales tax

VAT and US sales tax are both consumption taxes but operate very differently.

• VAT is charged at every stage of the supply chain, with businesses reclaiming VAT paid on purchases against VAT collected on sales
• Sales tax is charged only at the final point of sale to the consumer, with no reclaim mechanism for businesses

Use the Sales Tax Calculator for US sales tax calculations.

FAQs

What is VAT?

VAT is value added tax — a consumption tax applied at every stage of the supply chain. Businesses charge VAT on sales and reclaim VAT on purchases, remitting only the net amount. The final consumer bears the full tax burden.

How do you calculate VAT?

VAT = Net Price × (VAT Rate ÷ 100). To find the gross price, add the VAT to the net. To extract VAT from a gross price, divide by (1 + VAT rate as decimal). For 100 net at 20%, VAT is 20 and gross is 120.

What is the current UK VAT rate?

The UK standard VAT rate is 20% and applies to most goods and services. A reduced rate of 5% applies to specific items such as domestic energy, and a 0% rate applies to most food, books, and children's clothing.

What is the difference between VAT and sales tax?

VAT is charged at every stage of the supply chain with businesses reclaiming VAT on their purchases. Sales tax is charged only at the final retail sale with no reclaim mechanism. Customer-facing calculations look similar but the underlying systems are fundamentally different.