UK VAT runs at three rates, and whether a price already includes it changes the arithmetic entirely.
Who this is for: Moving between VAT-inclusive and VAT-exclusive prices.
The amount, which rate applies, and which way round
The amount
Net amount (for Add) or VAT-inclusive amount (for Remove), in your local currency.
Add treats the amount as net; Remove treats it as VAT-inclusive and extracts the VAT.
The rate
The UK rates since 4 January 2011: standard 20%, reduced 5%, zero 0%. Choose Manual for any other rate, and check which band your supply falls in on HMRC’s list.
%
Used only when Rate Type is set to Manual.
VAT Amount
20.00
Value Added Tax on the supply, in your local currency.
Three rates, and a fourth category that behaves differently
The standard rate applies to most goods and services. A reduced rate covers things like domestic fuel and some renovations. A zero rate covers most food, children’s clothing, books and newspapers.
UK VAT = net x rate ; standard 20%, reduced 5%, zero 0% (verify with HMRC)
Zero-rated is not the same as exempt, and the difference is expensive. A zero-rated business charges no VAT but can still reclaim VAT on its purchases; an exempt business charges none and cannot reclaim, which makes the VAT it pays a real cost.
The VAT fraction, not the percentage, extracts tax from a gross price
Adding 20% to a net price is a multiplication. Removing it from a gross price means dividing by 1.2 — equivalently, taking one sixth of the gross. Taking 20% of the gross price overstates the tax by a fifth.
Retail prices to consumers are quoted inclusive and business-to-business prices are usually quoted exclusive, so both directions are needed depending on which side of an invoice you are looking at.
Below the threshold you may still want to register
Registration becomes compulsory once taxable turnover passes the threshold on a rolling twelve-month basis. Below it, registration is optional — and worth considering for a business selling mainly to other VAT-registered businesses, since it allows reclaiming input VAT without making the price effectively higher to customers who reclaim it anyway.
For a business selling to consumers, voluntary registration raises the real price by the VAT rate or cuts the margin by it. The calculation is different in each case, and the answer is genuinely not always to register.
Flat rate, cash accounting and margin schemes
The flat rate scheme charges customers the normal rate but pays HMRC a lower percentage of gross turnover, with limited input reclaim. Cash accounting shifts the timing to when money moves rather than when invoices are issued. Margin schemes for second-hand goods tax only the margin rather than the full price.
Any of these makes the standard calculation here inapplicable. Check which scheme you are on before treating this figure as your liability.
Frequently Asked Questions
How do I work out VAT from a gross price?
Divide the VAT-inclusive price by one plus the rate. At 20%, dividing by 1.2 gives the net, and the difference is the VAT — equivalently, the VAT is one sixth of the gross at 20%. Do not simply take 20% of the gross.
What is the difference between zero-rated and exempt?
Zero-rated supplies are taxable at 0%, so the seller can usually reclaim input VAT, while exempt supplies are outside VAT and generally do not allow input VAT recovery. The distinction matters for VAT registration and reclaims, so check HMRC guidance.
Can I enter a custom VAT rate?
Yes. Select Manual as the rate type and enter your rate in the manual-rate field. This is useful for historical rates or to model a rate you have verified from an official source.
Is the result in pounds?
No. The calculator is currency-neutral, so figures are in whatever local currency you enter. The VAT arithmetic is identical regardless of currency.
Sources & References
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
The 20%, 5% and 0% rates are the UK rates in force since 4 January 2011 (checked 2026-09-25); which one applies depends on the supply.
A single rate is applied to the whole amount; mixed-rate supplies are not split automatically.
The tool does not determine whether a specific item is standard, reduced, zero-rated, or exempt.
Verify the correct rate and treatment for your supply with HMRC for your date.
Where it stops
Whether goods or services are standard, reduced, zero-rated, or exempt depends on HMRC rules not encoded here.
VAT schemes such as the Flat Rate Scheme or the VAT margin scheme use different calculations not covered.
The reverse charge for certain construction and cross-border supplies is outside the tool’s scope.
This is not tax advice; UK VAT rates and treatments can change and depend on the specific supply.
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Tax rules vary by country, state, tax year, filing status, income type, deductions, and exemptions. This calculator is educational and uses the values you enter. Always verify final tax treatment with official sources or a qualified tax professional.
Published the calculator with its formula, worked example, assumptions, limitations and a bespoke guide, and added an automated formula test suite covering it.
Tested VAT at the standard, reduced and zero rates in both directions, including the manual rate override.
Tested that removing VAT from a gross price uses the VAT fraction rather than the percentage, which differs by a fifth at the standard rate.
Stated that 20%, 5% and 0% are the UK rates in force since 4 January 2011 instead of calling them placeholders.
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