Finance Calc App

UK VAT calculator

Add VAT to a net price, or work out the VAT already included in a gross price. Defaults to the 20% standard rate, with 5% and zero-rated presets.

By Mitch Duncan Last reviewed Methodology
VAT rate: 20.00%

UK VAT is 20% standard. A 5% reduced rate applies to things like domestic energy; some goods are zero-rated.

Price before VAT
£100.00
VAT amount
£20.00
Total incl. VAT
£120.00
Effective rate
20.00%

How UK VAT works

Value Added Tax (VAT) is a consumption tax charged on most goods and services in the UK. The standard rate is 20%. A reduced rate of 5% applies to things like domestic gas and electricity, children's car seats, and home energy-saving materials, and some essentials — most food, children's clothing, books, and newspapers — are zero-rated (0% VAT but still technically taxable).

Gross = net × 1.20  ·  Net = gross ÷ 1.20 (VAT-inclusive → exclusive)

Worked example

A £100 net invoice at the 20% standard rate carries £20 of VAT, for a £120 gross total. To find the VAT inside a £120 inclusive price, divide by 1.2 to get £100 net — the VAT is £20. A common shortcut: the VAT fraction of a gross price at 20% is 1/6.

Input VAT, output VAT, and registration

VAT-registered businesses charge VAT on sales (output VAT) and reclaim the VAT they pay on purchases (input VAT), sending HMRC the difference. Registration is compulsory once taxable turnover passes the threshold (£90,000 from April 2024); below that it's voluntary. UK shop prices shown to consumers must be VAT-inclusive, which is why "remove VAT" is the usual operation when you need the net figure for accounts.

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Frequently asked questions

How do I add sales tax to a price?
Multiply the net (pre-tax) price by the tax rate to get the tax, then add it back. At a 10% rate, a 100 item carries 10 of tax for a 110 total — or in one step, 100 × 1.10 = 110. The calculator does this automatically in 'add' mode.
How do I remove tax from a tax-inclusive price?
Divide the gross (tax-inclusive) price by 1 plus the rate. At 10%, a 110 total divided by 1.10 is 100 net, leaving 10 of tax. A common mistake is to subtract 10% of the gross price — that gives the wrong answer, because the tax is a share of the net price, not the total.
What's the difference between sales tax, VAT, and GST?
They're all consumption taxes on goods and services, but they differ by country. The US charges state and local sales tax added at checkout; the UK charges Value Added Tax (VAT) at a 20% standard rate; Canada uses GST/HST (and sometimes PST); Australia charges a flat 10% GST. The arithmetic is the same — only the rate and rules differ.
Is the tax rate the same everywhere?
No. The US has no national rate — it's set by each state, county, and city and they stack, so it varies widely by location. The UK's standard VAT is 20% with reduced and zero rates for some goods. Canada's rate depends on the province. Australia is a flat 10%. Always use the rate that applies where the sale happens.
Are some goods tax-free?
Yes. Most systems exempt or reduce tax on essentials. The UK zero-rates most food, books, and children's clothing; Canada zero-rates basic groceries and prescription drugs; Australia makes basic food and many health and education services GST-free; many US states exempt groceries and medicine. This calculator applies one rate, so handle exempt items separately.
Why does dividing by the rate give the wrong tax amount?
Because tax is calculated on the net price, not the gross. If a 110 total includes 10% tax, the tax is 10% of the 100 net price, not 10% of 110 (which would be 11). To split a tax-inclusive total correctly, divide by 1 plus the rate to find the net price first, then subtract.

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