What this calculates
Enter a price and a VAT rate, and this shows the net figure, the VAT and the gross, updating as you type. It works in both directions: add VAT to a price that does not yet include it, or take VAT back out of one that does.
It opens on the second of those, because UK prices are usually quoted with VAT already in them — so the everyday job is pulling the tax back out rather than adding it on.
The formula
Adding VAT to a net price is a percentage of that price, added on top.
The tax, added on
VAT = net × (rate ÷ 100)The price with VAT
Gross = net + VATTaking VAT back out is not that operation reversed. The tax is a share of the net figure, not of the gross one you are holding, so you divide rather than subtract.
The price before VAT
Net = gross ÷ (1 + rate ÷ 100)The tax inside it
VAT = gross − netAt the standard rate the divisor is 1.2; at the reduced rate it is 1.05. A zero-rated price is the same figure whichever way round you read it.
Worked example
Now run it backwards. Given only the £120.00 total, dividing by 1.2 returns a net of £100.00 and leaves £20.00 of VAT — the same two figures. The two modes are exact inverses, which is the quickest way to check an invoice you have been handed rather than one you are writing.
The rate changes the answer more than people expect. The same £120.00 gross at the reduced rate holds only £5.71 of VAT, leaving a net of £114.29 — because 5% of a larger net is a much smaller slice of the same total.
When to use it, and the mistakes to avoid
Use it when raising an invoice, when checking one you have received, when a supplier quotes a price without saying whether VAT is included, and when you need the net figure for your books rather than the price on the receipt.
The mistakes that cost the most:
- Subtracting the rate to get the net. This is the big one. Taking 20% off a VAT-inclusive £120.00 gives £96.00, but the real net is £100.00 — the sum is out by £4.00 on a single line, and by a great deal more across a quarter. Divide by 1.2.
- Not asking whether a quote includes VAT. "£100" and "£100 plus VAT" differ by £20.00 at the standard rate. Settle it before the work starts, not at the invoice.
- Assuming the standard rate applies. The reduced and zero rates exist and change the figure substantially. Which one applies to a given item is set out on gov.uk, not guessed at here.
- Confusing zero-rated with VAT-free. A zero rate is a rate: it is charged at 0% and still belongs in the VAT system. This calculator will show it as £0.00 of VAT on an unchanged price.
- Rounding each line differently. Work to the penny and let the total fall out of the lines, rather than rounding the total separately and finding it disagrees with them.
FAQ
How do I add VAT to a price?
Multiply by the rate and add it on. At the standard rate of 20%, VAT on £100 is £20, so the price with VAT is £120. Switch the calculator to 'Add VAT to this amount' and enter the net figure — the one before tax — and it does both steps and shows the working.
How do I remove VAT from a price that already includes it?
Divide, do not subtract. At 20% you divide the gross price by 1.2: £120 ÷ 1.2 = £100 of net, leaving £20 of VAT. The calculator opens in this mode, because UK consumer prices are normally quoted with VAT already in them.
Why can't I just subtract 20% to remove VAT?
Because the VAT was never 20% of the price you are holding — it was 20% of the smaller net figure underneath it. Taking 20% off £120 gives £96, which is £4 short of the real net of £100. The gap grows with the price, and on a VAT return it grows with every line.
What VAT rates does this calculator use?
The three the current UK rules set: a standard rate of 20%, a reduced rate of 5% and a zero rate. They are read from this site's country rules rather than written into the calculator, so when they change the calculator changes with them. Which rate applies to a particular item is a separate question — check gov.uk.
Which rate applies to what I am selling?
That depends on the goods or service, and this calculator does not decide it for you — pick the rate and it does the arithmetic. HMRC publishes the classifications on gov.uk, and they are worth checking rather than guessing, because the difference between the reduced and standard rate is three quarters of the tax.
Does this handle VAT returns or registration?
No. It works out the VAT on a single amount, in either direction. It does not decide whether you must register, track what you have charged and reclaimed, or file anything. For the rules on registering and filing, see gov.uk.