VAT Calculator

What Is a VAT Calculator?

UK VAT trips people up constantly — especially when switching between invoices, receipts, and accounting software that doesn't always make clear whether a figure is net or gross. The two most common errors: subtracting 20% from a gross price instead of dividing by 1.2 (you'll always get the wrong answer), and assuming everything attracts standard rate when several common business expenses are zero-rated or exempt.

Standard rate is 20% and covers most goods and services. The reduced rate of 5% applies to domestic energy bills and children's car seats. Zero-rated goods — most food, children's clothing, books, public transport — carry no VAT but are still technically VATable, meaning businesses can reclaim input VAT on related costs. Exempt supplies like insurance, financial services, and private education are different again: no VAT charged and no input VAT recovery.

Enter an amount, select whether you're adding or removing VAT, and choose the rate. You'll see the net, VAT amount, and gross total separated out clearly. Useful for invoicing, expense claim processing, and VAT return preparation.

How Do You Use This VAT Calculator?

Enter the amount, choose whether to add or remove VAT, and select the VAT rate. Click Calculate to see the net amount, VAT amount, and gross total.

1. Enter the monetary amount in pounds.
2. Select whether to add VAT to a net amount or remove VAT from a gross amount.
3. Choose the VAT rate: 20% (standard), 5% (reduced), or enter a custom rate.
4. Click Calculate to see the breakdown.
5. Copy the net, VAT, and gross figures for your invoice or accounts.

How Does the VAT Calculator Formula Work?

The formula used: VAT = Net × (Rate / 100). To remove VAT: Net = Gross / (1 + Rate / 100)

What Are Some Example Calculations?

Adding 20% VAT to £500: VAT = £100. Gross = £600. Removing 20% VAT from £600: Net = £500. VAT = £100.

When Should You Use a VAT Calculator?

When preparing invoices. Add VAT to your net charge before sending. B2B clients generally expect to see the net amount with VAT shown separately; B2C prices must legally display the VAT-inclusive figure. Getting the direction wrong before sending is easily avoided — chasing a client for additional VAT after the fact is awkward for everyone.

At VAT return time. Reclaiming input VAT means extracting the net amount and VAT portion from every qualifying business receipt. This calculator speeds up that process considerably. Remember: you can only reclaim if the supplier is VAT-registered, you hold a valid VAT receipt, and the purchase was for business use.

What Do These Terms Mean?

How Do the Options Compare?

What Are the Best Tips to Know?

• Divide by 6 as a shortcut to find the VAT portion in a 20% VAT-inclusive price (e.g., £120 / 6 = £20 VAT).
• Keep VAT receipts for all business purchases above £25 to reclaim input tax on your return.
• Set a calendar reminder for your quarterly VAT return deadline to avoid late-filing penalties.
• Check whether your goods fall under the reduced rate (5%) or zero rate (0%) before applying 20%.
• Register for the Flat Rate Scheme if your VAT-exclusive turnover is under £150,000 for simpler accounting.

What Mistakes Should You Avoid?

• Subtracting 20% from a gross price instead of dividing by 1.2 — £120 minus 20% gives £96, not the correct £100.
• Applying 20% VAT to zero-rated items such as most food, books, and children's clothing.
• Forgetting to charge VAT after reaching the £90,000 registration threshold.
• Mixing up net and gross amounts when entering figures into accounting software.