VAT Calculator
Adding VAT to a price is straightforward. Taking it back out of a VAT-inclusive figure is where most errors happen, because you divide rather than subtract. This calculator handles both directions at the standard 20% rate, the reduced 5% rate, or any rate you enter.
Formula
Gross = net × 1.20 · Net = gross ÷ 1.20
- VAT on a gross figure = gross ÷ 6 at the 20% rate
£100 net: £100 × 1.20 = £120 gross, of which £20 is VAT
Adding and Removing VAT
To add VAT: multiply the net price by 1.20 (or 1.05 at the reduced rate).
£850 net × 1.20 = £1,020 gross, of which £170 is VAT.
To remove VAT: divide the gross price by 1.20.
£1,020 gross ÷ 1.20 = £850 net, leaving £170 of VAT.
The One-Sixth Shortcut
At the 20% standard rate, the VAT contained in a VAT-inclusive price is simply the total divided by six. HMRC calls this the VAT fraction.
A £54 bill contains 54 ÷ 6 = £9 of VAT.
It works because VAT is 20 parts out of a gross 120, and 20/120 cancels to 1/6. At the 5% rate the fraction is 1/21.
The Mistake to Avoid
Never take 20% off a gross price to find the net figure. The 20% was charged on the smaller net amount, not the larger gross one.
- Correct: £120 ÷ 1.20 = £100 net, £20 VAT.
- Wrong: £120 − 20% = £96, implying £24 of VAT.
That is £4 of VAT reclaimed that never existed, on a single £120 invoice.
Quick Reference
| Rate | Applies to | Net to gross | Gross to net |
|---|---|---|---|
| 20% standard | Most goods and services | × 1.20 | ÷ 1.20 |
| 5% reduced | Domestic fuel, child car seats | × 1.05 | ÷ 1.05 |
| 0% zero | Most food, books, children’s clothes | × 1 | ÷ 1 |
Frequently Asked Questions
- What is the current UK VAT rate?
- The standard rate is 20%. A reduced rate of 5% applies to things like domestic fuel and power, and some goods including most food, books and children's clothing are zero-rated.
- How do I work out the VAT in a total?
- At 20%, divide the total by six. At 5%, divide by 21. Both shortcuts come from the VAT fraction and give the tax element directly.
- What is the difference between zero-rated and exempt?
- Zero-rated sales are taxable at 0%, so they count towards turnover and you can reclaim VAT on related costs. Exempt items sit outside the VAT system and generally carry no reclaim.
- When do I have to register for VAT?
- Once taxable turnover over any rolling 12-month period passes the registration threshold, which was £90,000 at the time of writing. Check GOV.UK for the current figure.