VAT Calculator

At the UK standard rate of 20%, VAT is exactly one sixth of any VAT-inclusive price. A £120 gross price contains £20.00 of VAT and £100.00 of net value. A £599.99 price contains £100.00 of VAT and £499.99 net. To add VAT you multiply the net price by 1.20; to remove it you divide the gross price by 1.20. The division is the part almost everyone gets wrong — subtracting 20% from £120 gives £96.00, not £100.00, and overstates the VAT by £4.00 on that one invoice alone.

This guide covers both directions of the calculation, the rate in every major UK and EU market, what standard, reduced and zero rating actually mean, when you have to register, how input and output VAT net off on a return, whether the Flat Rate Scheme helps you, and how VAT works on imports and on digital services sold across borders. Every figure below matches what the VAT Calculator returns for the same inputs.

How to add VAT to a net price

Adding is the easy direction and only needs one multiplication:

VAT = net × (rate ÷ 100) Gross = net + VAT = net × (1 + rate ÷ 100)

On a £45.50 net price at 20%: 45.50 × 0.20 = £9.10 of VAT, giving a gross price of £54.60. At the reduced 5% rate the same £45.50 carries £2.28 of VAT for a £47.78 gross price.

Net price	VAT at 20%	Gross price
£10.00	£2.00	£12.00
£19.99	£4.00	£23.99
£45.50	£9.10	£54.60
£100.00	£20.00	£120.00
£250.00	£50.00	£300.00
£899.00	£179.80	£1,078.80
£1,250.00	£250.00	£1,500.00
£4,750.00	£950.00	£5,700.00

Quote business-to-business prices net and say "plus VAT" — a registered buyer reclaims it, so the net figure is the real price to them. Quote consumer prices gross: UK and EU rules require the advertised price to be the price the shopper pays, and "£500 + VAT" on a consumer page is both a compliance problem and a conversion problem when checkout shows £600.

How to remove VAT from a gross price — and why subtracting 20% is wrong

Working backwards from a VAT-inclusive total is the calculation people need for expense claims, supplier invoices and marketplace payouts. The formula is a division, not a subtraction:

Net = gross ÷ (1 + rate ÷ 100) VAT = gross − net

From £120.00 gross at 20%: 120.00 ÷ 1.20 = £100.00 net, so £20.00 was VAT.

Gross price	Net (÷ 1.20)	VAT
£12.00	£10.00	£2.00
£23.99	£19.99	£4.00
£54.60	£45.50	£9.10
£99.99	£83.33	£16.66
£120.00	£100.00	£20.00
£599.99	£499.99	£100.00
£1,199.00	£999.17	£199.83
£5,700.00	£4,750.00	£950.00

Now the mistake. Because the price "has 20% VAT on it", the instinct is to take 20% off the gross. That answer is always wrong, and it is wrong in a consistent, predictable direction.

Gross	Correct net (÷ 1.20)	Correct VAT	Wrong net (gross − 20%)	Wrong VAT	Overstated by
£100.00	£83.33	£16.67	£80.00	£20.00	£3.33
£120.00	£100.00	£20.00	£96.00	£24.00	£4.00
£250.00	£208.33	£41.67	£200.00	£50.00	£8.33
£600.00	£500.00	£100.00	£480.00	£120.00	£20.00
£1,000.00	£833.33	£166.67	£800.00	£200.00	£33.33
£5,000.00	£4,166.67	£833.33	£4,000.00	£1,000.00	£166.67

The 20% was never calculated on the gross figure — it was calculated on the smaller net figure, so 20% of the gross is always bigger than the VAT actually charged. At a 20% rate the error is exactly gross ÷ 30: £4.00 on £120, £33.33 on £1,000, £166.67 on £5,000. Strip VAT this way across a year of supplier invoices and you over-reclaim by 3.33% of everything you spent. The same "percentage of which base" trap shows up in discounts and markups — the Percentage Calculator and the Discount and Margin Calculator work through it outside a tax setting.

One rounding note: at £99.99 gross the net is £83.33 and the VAT is £16.66, not £16.67, because the net rounds up to the penny and the VAT is the remainder. Penny differences of this kind against an accounting package are normal, not errors.

The VAT fraction: what share of a gross price is tax

Every rate has a fixed fraction of the gross price that is tax. At 20% it is 1/6; at 25% it is 1/5. Learning the fraction for the rate you deal with most turns reverse-VAT into mental arithmetic.

Rate	Divide gross by	VAT share of gross	VAT in a 1,000 gross price	Net
5%	1.05	4.7619% (1/21)	47.62	952.38
9%	1.09	8.2569%	82.57	917.43
17%	1.17	14.5299%	145.30	854.70
19%	1.19	15.9664%	159.66	840.34
20%	1.20	16.6667% (1/6)	166.67	833.33
21%	1.21	17.3554%	173.55	826.45
22%	1.22	18.0328%	180.33	819.67
23%	1.23	18.6992%	186.99	813.01
24%	1.24	19.3548%	193.55	806.45
25%	1.25	20.0000% (1/5)	200.00	800.00
25.5%	1.255	20.3187%	203.19	796.81
27%	1.27	21.2598% (1/4.7)	212.60	787.40

The range is more compressed than the rates suggest: moving from 17% to 27% — the full spread of EU standard rates — only shifts the tax share of a gross price from 14.53% to 21.26%. That still matters if you sell at one gross price in several countries, because the price is fixed and the tax is not.

VAT rates in the UK and the EU

Rates below are the standard, reduced and zero rates in force for 2026. They are national rates set by each government, and they change — the UK moved its threshold in 2024 and Finland lifted its standard rate to 25.5%, so confirm the current figure for anything you are actually filing.

Country	Standard	Reduced rate(s)	Zero rate
United Kingdom	20%	5%	Yes
Ireland	23%	13.5%, 9%	Yes
Germany	19%	7%	Limited
France	20%	10%, 5.5%, 2.1%	Limited
Spain	21%	10%, 4%	Limited
Italy	22%	10%, 5%, 4%	Limited
Netherlands	21%	9%	Limited
Belgium	21%	12%, 6%	Limited
Austria	20%	13%, 10%	Limited
Poland	23%	8%, 5%	Yes
Portugal	23%	13%, 6%	Limited
Greece	24%	13%, 6%	Limited
Czechia	21%	12%	Limited
Sweden	25%	12%, 6%	Limited
Denmark	25%	none	Limited
Finland	25.5%	14%, 10%	Limited
Luxembourg	17%	14%, 8%, 3%	Limited
Hungary	27%	18%, 5%	Limited

Luxembourg at 17% and Hungary at 27% are the two ends of the EU range. On a single €50 gross price sold to consumers in both countries, that ten-point gap is worth €3.37 of your own net revenue per sale — €42.74 kept in Luxembourg against €39.37 in Hungary, a 7.9% swing in what the same sale is worth to you.

Standard, reduced and zero rates — and what falls into each

Most goods and services sit at the standard rate by default. The other categories are exceptions written into law, and the distinction that trips people up is not standard versus reduced — it is zero-rated versus exempt, which look identical on an invoice and behave completely differently.

Standard rate (20% in the UK) covers essentially everything not specifically listed elsewhere: electronics, clothing for adults, furniture, professional services, software, restaurant meals, alcohol and most retail goods.

Reduced rate (5% in the UK) applies to a short, specific list: domestic fuel and power, children's car seats, mobility aids for older people, certain residential conversions and some energy-saving materials.

Zero rate (0%) covers most food sold for home consumption, books and newspapers including digital editions, children's clothing and footwear, prescription medicines, public transport and new residential construction. Zero-rated is a taxable supply charged at nothing.

Exempt supplies are a different category entirely: insurance, most financial services, postage stamps, education, health and welfare services and most land and property transactions.

The practical difference is money. A zero-rated sale counts toward your taxable turnover and lets you reclaim the input VAT you paid on the costs behind it, which is why a bakery selling zero-rated bread is often in a permanent repayment position with HMRC. An exempt sale does not count toward your taxable turnover and blocks you from reclaiming the related input VAT, so the VAT on your costs becomes a real cost you can never recover. Businesses with a mix of both are "partly exempt" and have to apportion their input VAT, which is one of the more painful corners of the regime.

There is a fourth bucket worth knowing: outside the scope. Wages, dividends, most statutory fees and genuine grants are not supplies at all, so no VAT question arises.

When do you have to register for VAT?

The UK registration threshold is £90,000 of taxable turnover measured on a rolling 12-month basis, not a tax year or calendar year. Two separate tests can trigger it. The backward-looking test asks whether your taxable turnover in any rolling 12-month period has exceeded £90,000 — if so you must register within 30 days of the end of that month, and registration takes effect from the first day of the second month afterwards. The forward-looking test asks whether you expect to exceed £90,000 in the next 30 days alone; if so you must register immediately, effective from the date you formed that expectation. Once registered, the deregistration threshold is £88,000.

Taxable turnover includes standard-rated, reduced-rated and zero-rated sales. It excludes exempt supplies and anything outside the scope. That surprises businesses that assume "we charge 0% so it doesn't count" — a zero-rated food producer at £120,000 of turnover is over the threshold and must register.

Crossing the line is a genuine cliff edge if you sell to consumers, because you cannot usually raise your prices by 20% overnight. The VAT then comes out of the price you already charge:

Annual turnover	Registered	VAT due (gross ÷ 6)	Revenue you keep
£85,000	No	£0.00	£85,000.00
£90,000	No (at, not over)	£0.00	£90,000.00
£92,000	Yes	£15,333.33	£76,666.67
£100,000	Yes	£16,666.67	£83,333.33
£108,000	Yes	£18,000.00	£90,000.00
£110,000	Yes	£18,333.33	£91,666.67
£120,000	Yes	£20,000.00	£100,000.00

Selling £2,000 more takes retained revenue from £90,000 to £76,666.67, and you have to reach £108,000 of turnover just to get back to where you were. Input VAT reclaims soften this, but a service business with few costs has little to reclaim. Model the jump before you get near it with the Profit Margin Calculator and the Break-Even Calculator.

The mirror image is voluntary registration below the threshold, which makes sense in two situations: you sell mainly to VAT-registered businesses who reclaim whatever you charge, so your 20% costs them nothing; or your sales are zero-rated while your costs are standard-rated, putting you in a reclaim position from day one.

Input VAT, output VAT, and what a valid VAT invoice must show

Registration turns you into an unpaid tax collector with a right of offset. VAT you charge customers is output VAT and is never your money. VAT you pay suppliers is input VAT and is recoverable. Each return, you remit the difference.

Quarter	Net	VAT at 20%	Gross
Sales invoiced (output VAT)	£48,000.00	£9,600.00	£57,600.00
Stock purchases	£18,000.00	£3,600.00	£21,600.00
Software and subscriptions	£2,400.00	£480.00	£2,880.00
Accountancy and legal	£1,600.00	£320.00	£1,920.00
Equipment	£3,000.00	£600.00	£3,600.00
Input VAT total	£25,000.00	£5,000.00	£30,000.00
Payable to HMRC	—	£4,600.00	—

The business banked £57,600 and owes £4,600. If input VAT exceeds output VAT — common for exporters, zero-rated producers and anyone in a heavy investment quarter — the return produces a repayment instead.

Keep the VAT out of your own numbers. Revenue for that quarter is £48,000, not £57,600, and cost of goods is £18,000, not £21,600 — how to price products for profit covers why margin has to be calculated on net figures.

Reclaiming requires evidence, and the evidence is a valid VAT invoice from the supplier showing: a unique sequential invoice number; the supplier's name, address and VAT registration number; the date of issue and the tax point; the customer's name and address; a description, quantity and unit price excluding VAT for each item; the VAT rate applied to each line; the total net, total VAT and total gross; and any discount offered. Retail sales under £250 including VAT can use a simplified invoice that omits the customer details and shows the gross amount plus the rate.

Some input VAT is blocked however good the invoice is: business entertainment of non-employees, most car purchases with any private use, and the private-use share of mixed expenses. UK registered businesses also file through Making Tax Digital — digitally linked records and software-submitted returns, not manually keyed figures.

The Flat Rate Scheme and when it actually helps

The Flat Rate Scheme replaces the input-versus-output calculation with a single percentage applied to your VAT-inclusive turnover. You still charge customers 20%, you keep the difference between what you charged and what you pay, and in exchange you give up the right to reclaim input VAT on anything except capital assets over £2,000. You can join with taxable turnover of £150,000 or less excluding VAT, and must leave once total income exceeds £230,000 including VAT. There is a 1% discount in your first year of registration.

The flat rate depends on your trade, and there is a trap: if your spend on goods is less than 2% of turnover (or under £1,000 a year), you are a "limited cost trader" and pay 16.5% regardless of your sector. That rate is high enough to be worse than the standard scheme for most people, and it captures exactly the consultants and agencies the scheme used to attract.

Trade	Gross quarterly turnover	Output VAT	Input VAT	Standard scheme bill	Flat rate	Flat rate bill	Cheaper
Consultancy, limited cost trader	£57,600	£9,600	£900	£8,700	16.5%	£9,504	Standard, by £804
Consultancy, not limited cost	£57,600	£9,600	£900	£8,700	14%	£8,064	Flat rate, by £636
Computer and IT consultancy	£57,600	£9,600	£1,200	£8,400	14.5%	£8,352	Flat rate, by £48
General retail	£57,600	£9,600	£5,000	£4,600	7.5%	£4,320	Flat rate, by £280

The scheme rewards low-cost businesses whose sector rate happens to be generous and punishes anyone in the limited cost band: row one costs £3,216 a year more than doing the sums properly, while row three saves £192. Run your own last four quarters both ways first, and remember the flat percentage applies to gross turnover including zero-rated sales, which makes the scheme expensive for a mixed-rate business.

VAT on imports and postponed VAT accounting

Import VAT is charged at the standard rate of the destination country on a base that is wider than the invoice from your supplier. It applies to the customs value plus any duty plus the freight and insurance to the point of entry — so you pay tax on your shipping and on your duty.

Line	Amount
Goods value (FOB)	£10,000.00
Freight and insurance to UK port	£800.00
Customs duty at 4% on £10,800	£432.00
Value for import VAT	£11,232.00
Import VAT at 20%	£2,246.40
Cash due at the border with postponed accounting	£0.00

If you are VAT registered you reclaim that £2,246.40 as input VAT, so it is not a cost — but it is cash, and paying it at the border ties it up until your next return clears, potentially three months later. Postponed VAT accounting removes the gap: you declare the import VAT as output tax and reclaim it as input tax on the same return, so the entries cancel and nothing leaves your bank. For an importer landing £10,000 of goods a month that frees roughly £6,700 of working capital permanently. Most EU member states offer an equivalent deferment.

Small consignments work differently. Goods sold to UK consumers in consignments of £135 or less are treated as a UK supply at the point of sale, so the seller or the marketplace charges UK VAT at checkout instead of import VAT at the border; the EU does the same at €150 through IOSS. Because import VAT is recoverable while duty and freight are not, keep them separate in your costings — the Landed Cost Calculator does exactly that, and pushing a gross landed cost that still contains reclaimable VAT into your margin maths is a common way importers understate their own profitability.

Digital services and place-of-supply rules

For digital services — software, ebooks, courses, hosting, streaming, apps — the place of supply for a consumer sale is the customer's country, not yours. A UK developer selling an app to a buyer in Berlin charges German VAT at 19%, not UK VAT at 20%, and owes that money to Germany.

Nobody registers in 27 countries to do this. The EU's One Stop Shop takes a single quarterly return filed in one member state, covering all your EU B2C sales, and distributes the money. EU-established sellers get a €10,000 annual threshold for cross-border B2C digital sales below which they charge their home rate; UK and other non-EU sellers have no threshold and must register for non-Union OSS before the first sale. You also need two pieces of non-contradictory evidence of the customer's location — billing address, card issuer country, IP address — kept for ten years.

Business-to-business sales are simpler. Under the reverse charge you invoice with no VAT, note the customer's VAT number and the words "reverse charge" on the invoice, and the customer accounts for the tax in their own country.

Here is what the rules cost you if you hold a single €50 gross price across the EU rather than pricing per country:

Customer country	VAT rate	VAT in €50 gross	You keep
Luxembourg	17%	€7.26	€42.74
Germany	19%	€7.98	€42.02
France	20%	€8.33	€41.67
Spain	21%	€8.68	€41.32
Italy	22%	€9.02	€40.98
Ireland	23%	€9.35	€40.65
Greece	24%	€9.68	€40.32
Sweden	25%	€10.00	€40.00
Finland	25.5%	€10.16	€39.84
Hungary	27%	€10.63	€39.37

Same product, same headline price, and your net revenue varies by €3.37 depending on where the buyer lives. Model the blended rate for your actual country mix rather than assuming your home rate, and check whether the marketplace is the deemed supplier — on Etsy, eBay and Amazon it usually is, which shifts the obligation and changes what lands in your payout. The Marketplace Fee Comparison Calculator shows what remains after platform fees stack on top.

VAT vs US sales tax

The two taxes raise money from the same place — final consumption — by opposite mechanics, which is why US sellers expanding into Europe consistently get it wrong.

	VAT (UK and EU)	US sales tax
Charged at	Every stage of the supply chain	Final retail sale only
Shown in the advertised price	Yes, for consumers	No, added at checkout
Business purchases	Reclaimed as input VAT	Exempt with a resale certificate
Who sets the rate	National government, one standard rate per country	State, county and city — 13,000+ jurisdictions
Typical rate	17%–27%	0%–11.5% combined
Registration trigger	Turnover threshold (£90,000 in the UK)	Economic nexus, commonly $100,000 or 200 transactions
Who remits	Every business in the chain	The final seller only

A $100 item in Chicago is advertised at $100 and rings up at $110.25 with 10.25% combined sales tax. A €100 item in Germany is advertised at €100 and rings up at €100, of which €15.97 is VAT and €84.03 is the seller's. Same shelf price, entirely different message to the customer, and entirely different revenue to the seller. If you sell into the US as well, the Sales Tax Calculator handles the combined state-plus-local rates the same way this one handles VAT.

The other structural difference is who carries the risk. VAT arrives in instalments up the chain, so one business failing to remit costs the state only its slice; sales tax is all-or-nothing at the final step. That is why VAT invoices carry so many mandatory fields — the invoice is what lets the next business in the chain prove its reclaim.

Common mistakes

Subtracting 20% from a VAT-inclusive price. Divide by 1.20 instead. The shortcut overstates VAT by gross ÷ 30 every time — £4.00 on a £120 invoice, £166.67 on a £5,000 one — and if it is applied across a year of purchase invoices it produces an over-reclaim that HMRC will eventually assess with interest.

Treating zero-rated and exempt as the same thing. Both show no VAT on the invoice, but zero-rated sales count toward the registration threshold and preserve your right to reclaim input VAT, while exempt sales do neither. Getting this backwards means either missing a registration deadline or reclaiming VAT you were never entitled to.

Testing the threshold against your accounting year. The £90,000 test is a rolling 12 months, checked every month, plus a separate forward look at the next 30 days. A business that only checks at year end can be several months late registering — and late registration means paying over the VAT you should have charged, out of money you already spent.

Counting VAT-inclusive receipts as revenue. The VAT you collect was never yours. Running margins on gross figures overstates revenue by a sixth at 20% and quietly corrupts every pricing decision made from it. Track net, and set the VAT aside as it comes in.

Joining the Flat Rate Scheme without checking the limited cost trader rate. A consultancy that spends under 2% of turnover on goods pays 16.5%, not the 14% headline for its sector. On £57,600 of gross quarterly turnover that is £804 a quarter worse than the standard scheme — £3,216 a year for signing up to the simpler option.

Charging your home VAT rate on B2C digital sales abroad. The place of supply is where the customer is. A UK seller charging 20% to a German consumer has collected the wrong tax and still owes Germany 19%, with no way to recover the difference from a customer who has already been billed.

Related calculators

• Sales Tax Calculator — the US equivalent, with combined state and local rates
• Landed Cost Calculator — duty, freight and import VAT on goods you bring in
• Profit Margin Calculator — margins built on net figures, with VAT stripped out properly
• Percentage Calculator — the general case of the base-of-the-percentage problem
• Break-Even Calculator — what volume you need once registration takes a sixth of the price
• Discount and Margin Calculator — how discounting a gross price changes the net you keep
• Marketplace Fee Comparison — platform fees stacked on top of the tax