UK VAT Calculator

The calculator has three tabs. It opens on the VAT tab, set to the 20% standard rate with amounts in pounds sterling. In the add direction you enter a net amount and a rate, and it returns the VAT and the gross: gross = net × (1 + rate ÷ 100), so £250 net at 20% is £50 of VAT and £300 gross. Switch to remove, enter a gross amount, and it returns the net and the VAT element: net = gross ÷ (1 + rate ÷ 100), which at the standard rate is gross ÷ 1.2.

The Markup tab prices from cost: enter a cost and a markup percentage and the price is cost × (1 + markup ÷ 100). The Margin tab prices from the selling price: enter a cost and a margin percentage and the price is cost ÷ (1 − margin ÷ 100). The two are not interchangeable. A £600 cost with a 25% markup gives a £750 price; the same cost with a 25% margin gives £800, because the percentage is measured against the price rather than the cost. The £150 profit on the £750 price is a 25% markup but only a 20% margin.

All three tabs share one discipline: intermediate arithmetic runs at full precision, and only the displayed figures are rounded to two decimal places — so adding VAT and then removing it returns the number you started with.

A VAT-inclusive price is not stripped of VAT by taking 20% off it. The gross is the net plus 20% of the net, so the VAT inside the gross is a smaller share of it than 20%. HMRC's VAT guide (Notice 700, paragraph 7.3.1) states this as the VAT fraction: the rate of tax divided by 100 plus the rate. At the 20% standard rate that is 20/120, which simplifies to 1/6 — one sixth of any VAT-inclusive price is VAT, which is why £2.40 gross contains 40p of VAT. Equivalently, net = gross ÷ 1.2.

The classic error is subtracting 20% of the gross. On a £120 invoice total, the wrong method gives £120 − £24 = £96; the correct method gives £120 ÷ 1.2 = £100 net and £20 VAT. The subtraction answer is £4 low on every £120 — easy to miss on one receipt, material across a quarter's expenses.

At the 5% reduced rate the fraction is 5/105 = 1/21, so net = gross ÷ 1.05 and the VAT element is one twenty-first of the gross: a £105 gross line is £100 net plus £5 of VAT. The remove direction of the VAT tab applies the correct fraction for whichever rate is selected.

The check is the round trip: £100 × 1.2 returns the original £120, while £96 × 1.2 gives only £115.20 — the subtraction method fails its own reversal.

The UK has three rates of VAT. The standard rate has been 20% since 4 January 2011 and applies to most goods and services — anything not covered by a specific relief. The reduced rate of 5% and the zero rate of 0% are lists of specific categories rather than general rules, so the safe assumption for an ordinary business service is 20% unless GOV.UK says otherwise.

Exempt is not a fourth rate but a different legal category. A zero-rated sale is still a taxable supply: it counts towards the £90,000 registration threshold and the seller can generally reclaim input VAT on related purchases. An exempt sale — postage stamps, many financial and property transactions — sits outside the taxable-supply system: it does not count towards the threshold and carries no input-VAT reclaim. Running an exempt item through the calculator at 0% produces the right price arithmetic, since nothing is added either way, but the wrong legal label — and the label is what matters when turnover is being measured against the threshold or input VAT is being totalled.

VAT registration becomes compulsory when VAT-taxable turnover passes £90,000 in any rolling 12-month period. The threshold has been £90,000 since 1 April 2024, and neither the Autumn 2024 nor the Autumn 2025 Budget changed it — the £85,000 figure still shown on many pages died with the April 2024 uprating. The test is rolling: any 12 consecutive months, not the tax year or the calendar year. It is applied to taxable turnover, which excludes the VAT itself and includes zero-rated sales but not exempt ones — so the net figures this calculator produces are the ones that count. Deregistration works at a lower line: a registered business can ask HMRC to cancel its registration once taxable turnover falls below £88,000.

Once registered, the default position is the full mechanism: output tax charged on sales, input tax reclaimed on purchases, the difference paid to HMRC. The Flat Rate Scheme is the simplified alternative for businesses with VAT turnover of £150,000 or less, excluding VAT. Under it you still charge customers VAT normally, but pay HMRC a fixed percentage of your VAT-inclusive turnover and keep the difference, giving up the right to reclaim input VAT except on certain capital assets over £2,000. The percentage applies to the gross, not the net: £1,000 billed plus £200 VAT at an 11% flat rate means paying 11% of £1,200 = £132, not 11% of £1,000. A limited cost business — goods costing less than 2% of turnover, or less than £1,000 a year — must use 16.5%, at which point the scheme keeps almost nothing: 16.5% of £1,200 is £198 of the £200 charged. There is a 1% discount in the first year of VAT registration.

Quoting a price has a rule attached. Under rule 3.18 of the CAP Code, prices addressed to consumers must include VAT. VAT-exclusive prices are acceptable only where the price claim is clearly addressed to buyers who pay no VAT or can recover it — labelled 'business price' or 'trade price' — and any ex-VAT price must carry a prominent statement of the amount or rate of VAT payable. Where consumers and business customers both see the price, the VAT-inclusive figure must be at least as prominent as the exclusive one. This is where the three tabs meet. A VAT-registered seller prices on net figures, because output VAT on the sale goes to HMRC and input VAT on costs comes back — neither is profit. The working sequence is: cost, then the Markup or Margin tab to a net selling price, then the VAT tab for the consumer-facing figure. A £600 cost at a 25% margin is £800 ex VAT, which is £960 including VAT at 20%.

Invoices carry their own requirements. A full VAT invoice must show an identifying invoice number; the supplier's name, address and VAT registration number; the customer's name and address; the time of supply; a description of the goods or services; and, for each item, the quantity, unit price excluding VAT, VAT rate and any discount — plus the VAT charged and the total payable. For supplies of £250 or less including VAT, a simplified invoice is enough: supplier details, time of supply, description, the VAT-inclusive total and the VAT rate. The VAT element of such an invoice is recovered via the VAT fraction — exactly the arithmetic the remove direction performs.

Two limits are worth stating plainly. The calculator applies one rate at a time, so a mixed supply — a hamper containing zero-rated food and standard-rated confectionery, say — needs each line worked at its own rate. And VAT-registered businesses must keep digital records and file returns through compatible software under Making Tax Digital for VAT, which has applied to all VAT-registered businesses since April 2022, with sign-up automatic on registration; this page checks arithmetic, it is not a record.