VAT calculator
Add VAT to a net figure, or work out the VAT already inside a gross figure. The net, the VAT and the gross are all shown at once.
How VAT is worked out
VAT is a percentage added to the value of a sale. Adding it and removing it are not the same sum. To add VAT you multiply the net figure by the rate and add it on. To remove VAT you divide the gross figure by one plus the rate, because the gross already contains the VAT.
The common mistake is removing VAT by taking 20% off the gross price. That undershoots, because the 20% was charged on the smaller net figure, not on the gross. Dividing by 1.20 gives the right net.
Worked example
A net price of £100 at the standard 20% rate carries £20 of VAT, so the gross price is £120. Going the other way, a £120 gross price divided by 1.20 gives £100 net, confirming the £20 of VAT sits inside it. At the reduced 5% rate the same £100 net would carry only £5 of VAT.
The three rates
Most sales use the standard 20% rate. A reduced 5% rate covers a short list including domestic fuel and power and some energy-saving materials. A zero rate of 0% applies to most food, books and children's clothes: still technically taxable, but at 0%. Exempt supplies, such as insurance and some financial services, sit outside VAT entirely and are not the same as zero-rated.
Common questions
How do I add VAT to a price?
Multiply the net figure by the VAT rate and add it on. At the standard 20% rate a £100 net price becomes £120: £100 plus £20 of VAT.
How do I remove VAT from a gross price?
Divide the gross figure by 1.20. A £120 gross price divided by 1.20 gives £100 net, so the VAT inside it is £20. Taking 20% off £120 would be wrong: that gives £96.
What are the UK VAT rates?
The standard rate is 20% and covers most goods and services. A reduced 5% rate applies to items such as domestic energy and child car seats. A zero rate of 0% covers most food, children's clothing and books. Some supplies are exempt, which is different from zero-rated.
Do I have to charge VAT?
Only if you are VAT registered. Registration is compulsory once taxable turnover passes the £90,000 threshold, and optional below it. If you are not registered you neither charge VAT nor reclaim it.