About the VAT Calculator
A VAT calculator adds or removes value added tax from a price. VAT differs from US sales tax in being included in the displayed price and charged at every stage of production, with businesses reclaiming what they pay on inputs.
The formula
Add VAT: gross = net · (1 + rate); Remove: net = gross / (1 + rate)Net is the price excluding VAT, gross is the price including it. The UK standard rate is 20 percent, with reduced rates of 5 percent and zero on certain goods.
How to use this calculator
- 1Enter your Amount ($). The field starts at
100, which you can overwrite. - 2Enter your VAT Rate (%). The field starts at
20, which you can overwrite. - 3Read the result straight away — it recalculates as you type, so there is no button to press. Use Share to copy a link that reopens the page with your exact numbers filled in.
Worked example
| Input | Value |
|---|---|
| Amount ($) | 100 |
| VAT Rate (%) | 20 |
Result
VAT Amount (on net): $20.00
Gross (incl. VAT): $120.00
— OR, if $100.00 is GROSS —
Net (excl. VAT): $83.33
VAT Portion: $16.67
Those are the values the page loads with, so you can reproduce this result yourself and then change one field at a time to see what drives the outcome.
Understanding your result
The most common error is removing VAT by subtracting the rate. At 20 percent, a 120 gross price has a net of 100, not 96 — you divide by 1.20 rather than subtracting 20 percent. The VAT fraction of a gross price at 20 percent is one sixth, which is a useful shortcut.
VAT is collected at every stage but ultimately borne by the end consumer. Businesses charge VAT on sales and reclaim VAT on purchases, remitting only the difference. This is why VAT-registered businesses quote prices excluding VAT to other businesses — for them it is recoverable rather than a cost.
Things worth knowing
- To remove 20 percent VAT, divide by 1.2 or multiply by 5/6. Never subtract 20 percent.
- UK VAT registration is mandatory above a turnover threshold and voluntary below it.
- Zero-rated goods carry VAT at 0 percent and allow input reclaim; exempt goods do not allow reclaim.
- Most food, books, and children's clothing are zero-rated in the UK; domestic energy is at the reduced 5 percent rate.
- B2B prices are usually quoted excluding VAT; consumer prices must be shown including it.
Frequently asked questions
How do I remove VAT from a price?+
Divide by 1 plus the rate. At 20 percent, a 120 gross price gives 120 ÷ 1.2 = 100 net. Subtracting 20 percent would give 96, which is wrong.
What is the difference between VAT and sales tax?+
VAT is charged at every production stage with businesses reclaiming input tax, and it is included in displayed prices. US sales tax is charged once at final sale and added at the register.
What is the difference between zero-rated and exempt?+
Zero-rated goods are taxable at 0 percent, so the seller can still reclaim input VAT. Exempt goods are outside the VAT system entirely, and input VAT cannot be reclaimed.
When must a business register for VAT?+
When taxable turnover exceeds the registration threshold, which is reviewed periodically. Voluntary registration below it can be worthwhile if you incur significant reclaimable input VAT.