VAT Calculator
Value Added Tax (VAT) is charged on most goods and services at each stage of the supply chain. Unlike US sales tax — which is only applied at the final point of sale — VAT is collected incrementally by every business in the production and distribution chain. Each business pays VAT on its inputs, charges VAT on its outputs, and remits the difference to the tax authority. Understanding how VAT works is essential for anyone running a business, managing invoices, or tracking business expenses.
This calculator works in both directions. To add VAT, enter the net amount (the price before tax) and select your VAT rate — the calculator shows the VAT amount and the gross total you charge customers. To remove VAT from a gross (VAT-inclusive) price, switch to remove mode; the calculator extracts the VAT component and returns the original net price. Preset rates are provided for the UK (standard 20%, reduced 5%, zero 0%), major EU countries, Australian GST (10%), Canadian GST (5%), New Zealand GST (15%), and more.
Whether you are preparing invoices, checking receipts, pricing products for international markets, or reclaiming business expenses, this tool handles the arithmetic instantly. The formula is always displayed alongside the result so you can verify the calculation yourself and understand the logic behind it. Choose from preset country rates or enter any custom rate for less common jurisdictions.
Formula
VAT Amount = Net Amount × (VAT Rate ÷ 100) Gross Amount = Net Amount + VAT Amount
To add VAT, multiply the net amount by the VAT rate expressed as a decimal, then add it to the net amount. To remove VAT from a gross amount, divide the gross by (1 + VAT rate as decimal).
Worked Examples
Frequently Asked Questions
What is VAT?▾
VAT (Value Added Tax) is a consumption tax placed on goods and services at each stage of production or distribution. It is used in over 160 countries, including the UK and EU. In the US, the equivalent is sales tax, which works differently — it is only collected at the final point of sale to the consumer.
How do I add VAT to a price?▾
Multiply the net price by the VAT rate (e.g. 20% = 0.20), then add that to the net price. For example, £100 × 0.20 = £20 VAT, making the gross price £120. Alternatively, multiply the net price by (1 + rate): £100 × 1.20 = £120.
How do I remove VAT from a gross price?▾
Divide the gross price by (1 + VAT rate). For a 20% rate: divide by 1.20. For example, £120 ÷ 1.20 = £100 net. Do not subtract 20% of the gross — that gives the wrong answer because VAT was added on top of the net, not on top of itself.
What is the current UK VAT rate?▾
The standard UK VAT rate is 20%. A reduced rate of 5% applies to some goods and services such as home energy and certain renovation works. Some items such as most food, children's clothing, and books are zero-rated at 0%. Always check HMRC guidance for your specific product or service.
Is VAT the same as sales tax?▾
No. VAT is collected at every stage of the supply chain and each business remits the tax on the value it adds. Sales tax, used in the US, is collected only at the final point of sale to the consumer. From the consumer's perspective both add to the price paid, but the accounting and compliance obligations for businesses are very different.
How do I convert net to gross (and gross to net)?▾
Net to gross: multiply the net amount by (1 + VAT rate). For 20% VAT: net × 1.20 = gross. Gross to net: divide the gross amount by (1 + VAT rate). For 20% VAT: gross ÷ 1.20 = net. The difference between gross and net is the VAT amount.
What does 'divide by 1.2' mean for VAT?▾
Dividing by 1.2 is the shortcut for removing 20% VAT from a gross price. Since 20% VAT means the gross is 120% of the net, dividing by 1.20 gives the net amount. For 5% VAT, divide by 1.05. For other rates, divide by (1 + rate/100).
Related Calculators
Learn More
All calculations are for informational purposes only. They should not replace professional financial, tax, or legal advice. Always consult a qualified professional for decisions affecting your finances or business.