VAT Calculator

What this VAT calculator does

Value Added Tax has a habit of being already inside the number you are looking at, or not, and it is rarely labelled. So the useful thing a VAT calculator can do is go in both directions, and this one does.

Give it an amount, tell it whether that amount already includes VAT, give it a rate, and it returns the net, the VAT, and the gross all at once. Adding VAT to a quote, or pulling it back out of a receipt, is the same tool with the dropdown flipped.

One thing to decide before your first calculation. The rate field arrives empty, because VAT rates are set nationally and a default would be wrong for most of the world. Type the rate that applies to you. In the UK the standard rate has been 20 percent since 4 January 2011.

No currency is assumed, so pounds, euros, naira, rand and rupees all work identically. Everything runs in your browser and nothing is stored.

How to use it

1. Amount. The figure you are starting from.
2. Inclusive of VAT? Yes if the amount already contains VAT, so the tool works backwards to the net. No if it does not, so the tool adds VAT on top. Getting this wrong is the main way people end up with the wrong number, so the next section is worth thirty seconds.
3. VAT Rate. As a percentage. Zero is accepted, for zero rated goods.

Press Calculate and you get four lines back: net, the rate you used, the VAT amount, and gross. Press Reset to clear it.

The rate field currently wants at least 1 percent, so a zero rated supply cannot be entered directly. For those, the VAT is nothing and the net equals the gross, which needs no arithmetic. For general sales tax or GST where you only ever add tax to a net figure, our sales tax calculator is simpler.

The dropdown that changes the answer

Same amount, same rate, two completely different results. This is worth seeing rather than being told.

Take 1,000 at 20 percent.

Set to No, meaning the 1,000 is a net figure. VAT is 200, gross is 1,200.

Set to Yes, meaning the 1,000 already includes VAT. Net is 833.33, VAT is 166.67.

The VAT figure differs by 33.33 on a single line, and both answers are correct for their question. Which one you want depends entirely on what the 1,000 represents.

The practical test is simple. Ask what the number is. A price you are quoting to a business customer is almost always net, so choose No. A till receipt, a consumer price tag in the UK or EU, or a figure someone paid you is gross, so choose Yes. An invoice total is gross. An invoice line before the VAT row is net.

And here is the reason this matters beyond tidiness. If you are VAT registered and you treat a gross figure as net, you will declare more output VAT than you collected and pay the difference out of your own pocket. Treat a net figure as gross and you will under declare, which is the more expensive mistake when it is found.

Both formulas, and why one divides

Adding VAT to a net amount is a multiplication:

VAT = net × (rate ÷ 100)

Gross = net × (1 + rate ÷ 100)

Removing VAT from a gross amount is a division, and this is the half people get wrong:

Net = gross ÷ (1 + rate ÷ 100)

VAT = gross − net

The tempting shortcut is to take the gross and multiply it by the rate. It does not work, and it always overstates. On 1,200 at 20 percent, multiplying gives 240 when the real VAT is 200. You are forty pounds out, because you applied a percentage of the net price to a number that already had the net price plus its VAT inside it.

The rate is always defined against the net. Once VAT has been added, the base is bigger, so the same percentage produces a bigger figure. Divide to undo it.

A worked example, run both ways

You have quoted a client 2,400 for a piece of work at the UK standard rate of 20 percent. Depending on what you meant, that is two different invoices.

If 2,400 was your fee, before VAT. Set the dropdown to No.

VAT is 2,400 × 0.20 = 480. The invoice total is 2,400 + 480 = 2,880. You keep 2,400 and hand 480 to HMRC.

If 2,400 was the all in figure the client agreed to pay. Set the dropdown to Yes.

Net is 2,400 ÷ 1.20 = 2,000. VAT is 2,400 − 2,000 = 400. You keep 2,000 and hand 400 over.

Check it forwards: 2,000 × 1.20 = 2,400. It closes.

So the same conversation, read two ways, is the difference between earning 2,400 and earning 2,000. Four hundred pounds hanging on one unspoken word. This is why every quote to a business should say "plus VAT" or "including VAT" explicitly, and why the ones that do not tend to end in an awkward email.

The fraction accountants use instead

There is a shortcut for pulling VAT out of a gross figure that is quicker than dividing, and once you know it you will use it constantly.

At a 20 percent rate, the VAT inside any gross amount is exactly one sixth of it.

Check that on our 2,400: 2,400 ÷ 6 = 400. Which is what the long division gave us.

It works because the VAT fraction is rate divided by (100 plus rate). At 20 percent that is 20/120, which reduces to 1/6. The fractions for the other common rates:

The 1/6 is the one worth memorising if you deal in UK invoices. Any gross figure, divide by six, that is the VAT. A 60 restaurant bill contains 10 of VAT. A 30,000 car contains 5,000.

Notice how ugly 7/47 is, which is the fraction for the old 17.5 percent rate. Accountants were genuinely pleased when that rate went, and the fraction is a fair part of why.

Where the rates sit

VAT rates are set nationally, so there is no single number to give you. The UK, as the most common case for this tool, runs three:

The standard rate has sat at 20 percent since 4 January 2011, having risen from 17.5 percent. Before that it dipped to 15 percent for thirteen months across 2008 and 2009 as a stimulus measure, which is a useful reminder that these numbers do move.

Separately, some things are exempt rather than rated, including postage stamps and financial and property transactions. That is a different category and the next section explains why the difference matters.

Across Europe the spread is wide, from Luxembourg at the low end around 17 percent to Hungary at 27, with most member states clustering in the low twenties. Elsewhere the same tax appears under other names: GST in India, Nepal, Australia, New Zealand and Canada, and VAT at 7.5 percent in Nigeria. Whatever it is called, the arithmetic on this page is identical, so just enter your own rate.

For UK work, one threshold is worth knowing alongside the rates. VAT registration becomes compulsory once taxable turnover passes £90,000 in any rolling twelve month period, a figure that has stood since April 2024. Below that you can still register voluntarily, which is often worth doing if your customers are themselves VAT registered.

Zero rated is not the same as exempt

They look identical from the customer's side, since neither adds anything to the price. From the seller's side they are very different, and the difference is real money.

Zero rated supplies are still inside the VAT system. The rate happens to be nought. Because they are taxable supplies, a business selling them can register for VAT and reclaim the input VAT on everything it buys. Most food and children's clothing sit here.

Exempt supplies are outside the system entirely. No VAT is charged, and crucially no input VAT can be reclaimed on the costs of making them. Insurance, most financial services, and postage stamps sit here.

So a business making zero rated supplies typically gets money back from HMRC each quarter, because it charges nothing and reclaims plenty. A business making exempt supplies swallows the VAT on its own purchases as a straight cost.

That is the whole reason a bakery cares about the classification of its products and an insurance broker cares about partial exemption calculations. Same zero on the invoice, opposite consequences on the balance sheet.

There is also outside the scope, a third category for things VAT simply does not touch, such as statutory fees and some transactions between group companies. Rarer, but it exists.

Questions people ask

How do I remove VAT from a price?

Divide the gross by 1 plus the rate as a decimal. At 20 percent, divide by 1.2. Or use the fraction: one sixth of the gross is the VAT. Set the dropdown to Yes and the calculator does it for you.

Why is the rate field empty?

Because VAT rates are national and there is no default that would be right for everyone. Enter the rate that applies where you are trading. The UK standard rate is 20 percent, and the field also accepts zero for zero rated goods.

What is the UK VAT rate?

20 percent standard, 5 percent reduced on a narrow list including home energy and children's car seats, and 0 percent on zero rated items including most food and children's clothes.

Why is VAT one sixth of the gross and not one fifth?

Because the 20 percent is charged on the net, not the gross. A net of 100 becomes a gross of 120, and the 20 of VAT is one sixth of that 120. One fifth would be right if the rate were charged on the total, which it is not.

What is the difference between zero rated and exempt?

Zero rated is taxable at 0 percent and lets the seller reclaim input VAT. Exempt is outside the system and does not. Same price to the customer, very different position for the business.

Does it work for GST or for other countries?

Yes. GST, IVA, BTW and VAT all work the same way arithmetically. Enter your national rate and both directions behave identically.

Can I enter a rate of 0?

Not at the moment, the field wants at least 1 percent. For a zero rated supply the VAT is nothing and the net equals the gross, so there is nothing to compute.

References

A note on sourcing and dates. UK rates, the categories they apply to, and the date of the change from 17.5 to 20 percent are taken directly from HMRC's published guidance on GOV.UK. VAT rates are set nationally and do change, so anyone outside the UK should check their own tax authority, and anyone applying a rate to a specific product should check the classification rather than assuming the standard rate.

1. HM Revenue and Customs, VAT Rates, GOV.UK. https://www.gov.uk/vat-rates
2. HM Revenue and Customs, Rates of VAT on Different Goods and Services, GOV.UK. https://www.gov.uk/rates-of-vat-on-different-goods-and-services
3. HM Revenue and Customs, VAT Rates on Different Goods and Services for Businesses, GOV.UK. https://www.gov.uk/vat-businesses/vat-rates