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VAT Calculator
Use this free VAT calculator to add VAT to a net price or strip VAT out of a gross price. Pick a rate preset or type your own rate, and the calculator shows the net price, the VAT amount, and the gross price — with a live chart of the breakdown.
| Figure | Value |
|---|---|
| Net price (ex-VAT) | £100.00 |
| VAT amount | £20.00 |
| Gross price (inc-VAT) | £120.00 |
| VAT rate used | 20% |
How it works
Value Added Tax, or VAT, is a consumption tax added to the price of most goods and services in many countries, including the United Kingdom and most of Europe. When a business sells something, it charges VAT on top of its own price; when it buys something, it usually pays VAT too, and registered businesses reclaim the VAT they paid on their purchases. The end consumer is the one who ultimately bears the cost, which is why shop prices are usually shown including VAT while business-to-business quotes are often shown excluding it.
This calculator works in both directions. In "add VAT" mode you start with a net price — the price before tax — and the calculator adds the tax: VAT = net price × rate, and gross price = net price + VAT. In "remove VAT" mode you start with a gross price — the price the customer actually pays — and the calculator strips the tax back out: net price = gross price ÷ (1 + rate), and VAT = gross price − net price. Both directions use the same rate, and both are shown in the breakdown table so you can see all three figures at once.
The most common mistake with VAT is removing it the wrong way. Taking 20% off a £120 price gives £96, which is wrong: the VAT in a £120 price at 20% is £20, and the net price is £100. The error happens because the 20% was charged on the net price (£100), not on the gross price (£120). Dividing by 1.20 is the correct way to remove VAT, and that is exactly what this calculator does in remove mode. The same trap applies at every rate: to strip out 5% VAT, divide by 1.05, not by subtracting 5%.
The rate presets cover the rates most people meet: 0% for zero-rated goods such as most food and children's clothing in the UK, 5% for the reduced rate on things like domestic energy, 10%, 15%, 20% — the standard UK rate — and 25%. If your rate is different, type it into the custom rate box; the presets are only a shortcut. Rates differ by country and by the type of goods, and they change over time, so always check the rate that applies to your own sale or purchase rather than assuming the standard rate.
Businesses use this kind of calculation constantly: quoting a job, checking a supplier's invoice, working out how much of a payment is VAT that can be reclaimed, or setting a retail price that leaves the right margin after tax. A freelancer quoting £500 for a job at 20% VAT needs to know the client will actually pay £600. A shopkeeper who takes £1,200 at the till needs to know £200 of it is VAT owed to the tax authority, not profit. Getting the direction right — adding to a net price, dividing out of a gross price — is the whole skill, and it is worth double-checking on large invoices where a small slip costs real money.
Worked example
A shop sells a lamp for £100 before tax, and the VAT rate is 20%.
Step 1: The VAT on the sale is £100 × 20% = £20.00.
Step 2: The gross price the customer pays is £100 + £20 = £120.00.
Step 3: Checking the reverse direction, a customer who paid £120 can find the net price by dividing: £120 ÷ 1.20 = £100.00.
Step 4: The VAT inside that £120 is £120 − £100 = £20.00, which matches Step 1.
The result: £100 ex-VAT at 20% becomes £120.00 inc-VAT, with £20.00 of VAT. The other way round, £120 inc-VAT at 20% is £100.00 ex-VAT. Try a second case: £250 ex-VAT at the 5% reduced rate gives VAT of £12.50 and a gross price of £262.50 — the same two steps, just a smaller rate.
FAQ
How do I add VAT to a price?
Multiply the net price by the VAT rate to get the VAT amount, then add it to the net price. At 20%, a £100 net price carries £20 of VAT, so the gross price is £120. Use the add mode in this calculator and it does both steps for you.
How do I remove VAT from a price?
Divide the gross price by 1 plus the rate. At 20%, divide by 1.20: £120 ÷ 1.20 = £100 net, so the VAT inside is £20. Do not just subtract 20% from the gross price — that gives £96, which is wrong.
What is the standard VAT rate?
It depends on the country. In the United Kingdom the standard rate is 20%, with a 5% reduced rate for items such as domestic energy and a 0% rate for zero-rated goods such as most food. Other countries set their own standard rates, so check the rate where the sale takes place.
Is VAT the same as sales tax?
No, although both are consumption taxes paid by the buyer. VAT is charged at every stage of production and distribution, with each business reclaiming the VAT it paid, while a sales tax is normally charged only once, at the final sale to the consumer. The maths for the buyer looks similar, but the systems work differently behind the scenes.
Can a business reclaim the VAT it pays?
In most VAT systems, yes — a VAT-registered business reclaims the VAT it paid on its purchases (input tax) and pays over the VAT it charged on its sales (output tax), handing the difference to the tax authority. That is why business quotes are often shown excluding VAT: the VAT is not a cost to the business, only to the final consumer.