VAT calculator UK
Add VAT to a price, take it off a total, or work backwards from a VAT-inclusive figure. Shows net, VAT and gross together at 20%, 5% or zero-rated.
Taking VAT off means dividing
This is the sum people get wrong, and it is worth being blunt about, because it ends up on real invoices.
A receipt says £100 including VAT. Take 20% off and you get £80. But add 20% back onto £80 and you land on £96, not £100. So £80 was never the price before VAT.
The sum that works divides instead: £100 ÷ 1.2 = £83.33. Add 20% to £83.33 and you are back at £100 exactly, which is the check that proves it.
Why the two disagree. The 20% was charged on the smaller number, so taking 20% off the bigger number takes off too much. The VAT on £100 gross is £16.67, not £20. If you invoice off the wrong figure you are £3.33 out on every hundred pounds, and it compounds across a year.
The one-sixth shortcut
At 20%, the VAT inside a gross price is exactly one sixth of it. £120 including VAT holds £20 of VAT. £60 holds £10. £300 holds £50.
The reason is short: VAT is 20 parts on top of 100, so the total is 120 parts and the VAT is 20 of them. 20/120 is 1/6. It is the fastest way to sanity-check a receipt without a calculator, and it only works at 20%.
The three rates
- 20% standard. Most goods and services. It has been 20% since 4 January 2011.
- 5% reduced. Home energy, children's car seats, some energy-saving materials.
- 0% zero-rated. Most food, children's clothes, books and newspapers.
Zero-rated and exempt are different things, and the difference matters if you run a business. Zero-rated sales are taxable at 0%, so they count towards your turnover and you can still reclaim the VAT you paid on your own costs. Exempt sales (postage stamps, insurance, most financial services) sit outside VAT altogether, and you cannot reclaim against them.
When you have to register
You must register once your taxable turnover passes £90,000 in any rolling 12 months. Rolling means any 12 months, not your accounting year, so it can creep up on you mid-year. You also have to register if you expect to pass it in the next 30 days alone.
You can register voluntarily below the threshold, which suits you if your customers are VAT-registered businesses and you have VAT on costs to reclaim. It suits you less if you sell to the public, because your prices effectively rise by 20% overnight.
Common questions
How do I work out VAT?
To add it, multiply by 1.2 at the standard 20% rate: £100 becomes £120. To take it off a VAT-inclusive total, divide by 1.2: £100 becomes £83.33. Or put the figure in above and it shows net, VAT and gross together.
How do I remove VAT from a price?
Divide by 1.2, do not take 20% off. £100 including VAT is £83.33 before VAT, because £83.33 plus 20% comes back to £100. Taking 20% off would give £80, and £80 plus 20% is only £96, so it cannot be right.
What is reverse VAT?
Working backwards from a total that already includes VAT to find the price before VAT and the VAT itself. It is what you need when you have a receipt showing one figure and have to split it for your books. Pick "Remove VAT" above.
How much is VAT in the UK?
The standard rate is 20% and has been since 4 January 2011. A reduced rate of 5% applies to things like home energy and children's car seats, and a zero rate applies to most food, children's clothes and books.
How much VAT is in a gross price?
At 20%, exactly one sixth of it. £120 including VAT contains £20 of VAT, because VAT is 20 parts added to 100, making 120, and 20 out of 120 is a sixth. The shortcut only works at the 20% rate.
What is the VAT registration threshold?
£90,000 of taxable turnover in any rolling 12 month period. Rolling means any 12 months rather than your accounting year, so check it as you go. You must also register if you expect to pass £90,000 in the next 30 days on its own.
What is the difference between zero-rated and exempt?
Zero-rated sales are taxable, just at 0%, so they count towards your turnover and you can reclaim VAT on your costs. Exempt sales, like insurance and postage stamps, sit outside VAT and carry no right to reclaim.