VAT Calculator
Add VAT to an amount
Calculate how much VAT to add to a net amount
Net Amount
£0.00
VAT Amount (20%)
£0.00
Gross Amount
£0.00
Remove VAT from an amount
Calculate how much VAT is included in a gross amount
VAT Amount (20%)
£0.00
Gross Amount
£0.00
Net Amount
£0.00
How to Calculate VAT
To add VAT at the standard 20% rate, multiply the net price (excluding VAT) by 1.20. For example, a net price of £500 × 1.20 = £600 gross price (including VAT), with £100 being the VAT.
To remove VAT, divide the gross price (inclusive of VAT) by 1.20 to get the price excluding VAT. So £600 ÷ 1.20 = £500 net. The VAT element is £100.
Don't subtract 20% to remove VAT. £600 minus 20% gives you £480, which is wrong. You must divide by 1.20, not multiply by 0.80. The correct answer is £600 ÷ 1.20 = £500.
The VAT Formulas
- Add VAT: Gross = Net × (1 + VAT rate). At 20%: Gross = Net × 1.20
- Remove VAT: Net = Gross ÷ (1 + VAT rate). At 20%: Net = Gross ÷ 1.20
- Find the VAT amount: VAT = Gross − Net
For the reduced rate of 5%, replace 1.20 with 1.05. For any custom rate, use 1 + (rate ÷ 100).
UK VAT Rates
There are three main VAT rates in the UK, plus exemptions. You need to know which rate applies to invoice correctly.
Standard Rate: 20%
Applies to most goods and services like electronics, clothing, restaurant meals, and professional services.
Reduced Rate: 5%
Domestic energy, children's car seats, smoking cessation products, sanitary products.
Zero Rate: 0%
Most food, books, children's clothing, public transport, exports.
Why Zero-Rated is Not the Same as Exempt
Zero-rated means 0% VAT is charged, but the supply remains within the VAT system, so businesses can still reclaim input VAT on their costs. Exempt means the supply is outside the VAT system entirely. No VAT is charged and no input VAT can be reclaimed.
For example, a food wholesaler (zero-rated) spending £50,000 + VAT on costs can reclaim the full £10,000 input VAT. A financial adviser (exempt) spending the same amount gets nothing back. That £10,000 is a dead cost.
Do You Need to Register for VAT?
You must register for VAT when your taxable turnover exceeds £90,000 in any rolling 12-month period. You need to notify HMRC within 30 days of the end of the month you crossed the threshold.
If you expect your turnover to exceed £90,000 in the next 30 days, you must register immediately. If you sign a £100,000 contract with net-30 terms, you must register right away. If you don't charge VAT on that invoice, you'll owe HMRC £16,666.67 out of your own pocket.
Why Register Voluntarily?
If you're in B2B, registering voluntarily (even below the threshold) is often worthwhile. Your clients can reclaim any VAT you charge, and you can reclaim input VAT on all your business expenses. For B2C, the 20% uplift can hurt competitiveness, so delaying is often better.
Common VAT Mistakes That Cost Businesses Money
Subtracting 20% instead of dividing by 1.20
To remove VAT from £1,200: correct is £1,200 ÷ 1.20 = £1,000. Not £1,200 × 0.80 = £960. The £40 difference adds up across hundreds of invoices.
Claiming VAT without a valid invoice
A valid VAT invoice must show the supplier's name and address, their VAT number, invoice date, description, amount excluding VAT, rate, and total VAT charged. Card receipts, proformas, and emails are not valid.
For purchases under £250 (including VAT), a simplified VAT invoice is acceptable: just the supplier's name, address, VAT number, date, description, and VAT-inclusive total.
Mixing up zero-rated and exempt
Getting this wrong means either reclaiming VAT you're not entitled to (penalties) or missing out on legitimate reclaims worth thousands per year.
Not reclaiming VAT on capital purchases
A £50,000 equipment purchase means £10,000 in reclaimable VAT. Make sure these go through the right account with a proper paper trail.
Filing late because you can't afford the bill
This triggers double penalties. Always file on time, even if you can't pay. Contact HMRC for a Time to Pay arrangement. They'll usually give you up to 12 months.
Forgetting VAT on goods taken for personal use
Using company stock for personal purposes (builder using materials at home, baker taking bread home) means you owe VAT on those items. This is regularly caught in audits.
VAT Optimisation Tips
Reclaim VAT on Often-Overlooked Expenses
- Mobile phone bills: Reclaim VAT on the business portion, not just expense the cost.
- Home office costs: Reclaim VAT on business portion of electricity, heating, broadband, even rent if VAT is charged.
- Mileage: Reclaim VAT on business-use fuel if you keep proper logs and receipts.
- Professional subscriptions: Industry memberships, trade publications, professional insurance.
You can also reclaim 50% of VAT on a car lease even with private use. That works out to roughly one of your 12 lease payments per year being effectively free.
Open a Separate VAT Bank Account
Transfer VAT collected into a dedicated account. When return time comes, the money is already set aside, usually with a little extra from expense reclaims.
Claim Pre-Registration VAT
Just registered? Claim VAT back on goods from the last 4 years and services from the last 6 months.
Use Postponed VAT Accounting on Imports
PVA lets you account for import VAT and reclaim it on the same return. Net cash impact: zero.
You must select PVA on your customs declaration. Some freight forwarders default to the old method unless you specifically ask.
Reclaim VAT on Bad Debts
If a customer hasn't paid after 6 months, reclaim the VAT. The window expires after 4 years and 6 months from when payment was due.
Global VAT Rates Compared
| Country | Standard Rate | Registration Threshold |
|---|---|---|
| 🇬🇧 United Kingdom | 20% | £90,000 (~€105k) |
| 🇺🇸 United States | No VAT (sales tax 0–10.25%) | Varies by state |
| 🇩🇪 Germany | 19% | €22,000 |
| 🇫🇷 France | 20% | €37,500 / €85,000 |
| 🇮🇪 Ireland | 23% | €40,000 / €80,000 |
| 🇳🇱 Netherlands | 21% | €20,000 |
| 🇮🇹 Italy | 22% | €85,000 |
| 🇸🇪 Sweden | 25% | SEK 80,000 (~€7k) |
| 🇭🇺 Hungary | 27% (highest in EU) | None |
| 🇨🇭 Switzerland | 8.1% | CHF 100,000 (~€105k) |
| 🇦🇺 Australia | 10% (GST) | AUD 75,000 (~£39k) |
| 🇨🇦 Canada | 5% (GST + provincial) | CAD 30,000 (~£17k) |
| 🇦🇪 UAE | 5% | AED 375,000 (~£80k) |
| 🇸🇬 Singapore | 9% (GST) | SGD 1,000,000 (~£590k) |
| 🇯🇵 Japan | 10% | ¥10,000,000 (~£52k) |
| 🇮🇳 India | 18% (GST) | ₹4,000,000 (~£37k) |
| 🇿🇦 South Africa | 15% | ZAR 1,000,000 (~£43k) |
The UK's £90,000 threshold is among the highest in the OECD. More than double the EU average of ~€44,000, keeping roughly 3.2 million UK small businesses out of the VAT system entirely.
Frequently Asked Questions
About This VAT Calculator
This VAT calculator helps UK businesses, freelancers, contractors, and individuals calculate VAT on invoices, receipts, and quotes. It supports the standard 20%, reduced 5%, zero, and any custom rate. All calculations happen in your browser and no data is sent to any server.
This guide is for informational purposes only and does not constitute professional tax advice. VAT rules change regularly. Always verify current rates, thresholds, and rules with HMRC or a qualified accountant.