What this VAT calculator does
- Adds VAT to a net (pre-tax) price to give the gross total your customer pays.
- Works as a VAT remover too, pulling the tax back out of a gross (tax-inclusive) price to reveal the underlying net amount.
- Works with any VAT rate, not just the standard 20%.
- Shows the VAT amount on its own, next to the net and gross figures.
How to calculate VAT: two formulas that cover every case
To add VAT, multiply the net amount by one plus the rate: gross = net × (1 + rate). So 100 at 20% becomes 100 × 1.20 = 120.
To remove VAT, divide the gross amount by one plus the rate: net = gross ÷ (1 + rate). So 120 at 20% becomes 120 ÷ 1.20 = 100, leaving 20 of VAT.
At the UK's 20% rate that gives two shortcuts to work out VAT: multiply by 1.2 to add it, divide by 1.2 to remove it. A net price of £500 becomes £600, which is a VAT amount of £100. Going the other way, £600 ÷ 1.2 = £500. If you only need the VAT amount inside a gross price at 20%, divide the gross by 6: £600 ÷ 6 = £100.
VAT-inclusive vs VAT-exclusive: the mix-up that doubles your error
A VAT-inclusive price — a price including VAT — already has tax built in, so what you see is what gets paid, tax and all. A VAT-exclusive price, meaning a price excluding VAT, is the net amount before tax gets added on top. Retail prices are usually VAT-inclusive; B2B quotes are often VAT-exclusive — check for "+VAT" or "excl. VAT" next to a price if you're not sure which one you're looking at. This is also what decides which mode to use: pricing something from scratch means adding VAT to a net amount, while working backwards from a VAT-inclusive price or receipt means removing it. Mixing the two up is the most common VAT mistake, and it roughly doubles the error.
VAT rates by country: from 17% in Luxembourg to 27% in Hungary
Standard rates vary widely — this calculator works with any of them, just enter the one that applies to you.
Reduced rates for specific goods — food, books, children's items — are common too, often half the standard rate or less.
The United States isn't listed — it doesn't have VAT. Sales tax is the closest equivalent, but it works differently: charged once at the point of sale, set by state and local governments, with no VAT-style reclaiming for businesses.
Rates shown here are approximate and can change. Verify your country's current VAT rate with your local tax authority before relying on it for official filings.
Charging VAT to a client in another country: when 0% is the right answer
The most common real-world confusion isn't the math — it's which rate to charge in the first place. If you're VAT-registered and invoicing another VAT-registered business in a different EU country, most services fall under the reverse charge mechanism: you invoice at 0% VAT, and your client accounts for the VAT themselves in their own country. If your client is a private individual rather than a business, or you're both in the same country, the reverse charge usually doesn't apply and you charge your normal local rate.
If you're not VAT-registered at all — many freelancers below their country's registration threshold aren't — you generally don't charge VAT regardless of where the client is based, but you also can't reclaim VAT on your own expenses. Registration status decides whether you charge VAT at all; the calculator's rate field only matters once that's settled.
Reverse-charge and cross-border VAT rules vary by country and service type — this is a general starting point, not a substitute for checking your specific situation with a tax advisor or your local tax authority.
UK VAT rules: registration, reclaims and invoices
The arithmetic above is the same everywhere. What changes by country is when you have to charge VAT at all, what you can claim back, and what your paperwork has to show. This section covers the UK specifically — if you're elsewhere, the same questions apply but the figures and deadlines will differ.
UK VAT rates: 20%, 5% and 0%
The UK has three VAT rates. Which one applies depends on what you sell, not on the size of the business or who the customer is. The buttons under the rate field above set each one in a tap.
| Rate | % | What it applies to |
|---|---|---|
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Some goods and services, such as children's car seats and home energy |
| Zero rate | 0% | Zero-rated goods and services, such as most food and children's clothes |
Rates as published by GOV.UK, checked October 2026.
The £90,000 registration threshold, and the 30-day rule that catches people out
You must register for VAT with HMRC once your total taxable turnover for the last 12 months goes over £90,000. That's a rolling 12 months, not your accounting year or the tax year — so it can tip over in the middle of a quarter without anything special happening on your books.
There's a second trigger that's easier to miss. If you expect your taxable turnover to go over £90,000 in the next 30 days alone, you have to register straight away. The detail that costs people money: your effective date of registration is the date you realised it would happen, not the date the money actually landed. Win a single large contract that clears the threshold on its own and the clock starts when you sign, not when you invoice.
Voluntary registration below the threshold is allowed and is sometimes worth it: once registered you can reclaim VAT on your own costs. It's rarely worth it if you sell mainly to consumers, since you'd be adding 20% to your prices without your customers being able to claim it back. Selling mainly to VAT-registered businesses flips that calculation, because your clients reclaim whatever you charge them.
Zero-rated is not the same as exempt
These sound interchangeable and are not, and the difference decides whether you can reclaim anything.
- Standard rate — 20%. Most goods and services.
- Reduced rate — 5%. A narrower set, including home energy and children's car seats.
- Zero-rated — 0%. Still a taxable supply, just taxed at nothing. Most food and children's clothes fall here.
- Exempt. Outside the VAT system entirely — postage stamps, and financial and property transactions.
Here's why it matters. Zero-rated sales are taxable supplies, so they count towards your £90,000 threshold and you can still reclaim the VAT on costs you incurred making them. Exempt sales do neither: they don't count towards registration, and you can't reclaim VAT on the costs behind them. A business selling only exempt goods generally can't register at all, which means every penny of VAT it pays to suppliers is simply a cost.
Input VAT and output VAT: what you actually pay HMRC
Once registered, you're a collection point rather than a payer. Output VAT is what you charge your customers. Input VAT is what you were charged by your own suppliers. You hand HMRC the difference on your VAT return, normally filed quarterly. Returns go in under Making Tax Digital for VAT, which requires VAT-registered businesses to keep their records digitally and file their returns using software, unless HMRC has agreed an exemption.
If your input VAT exceeds your output VAT in a period — a quarter with heavy equipment purchases, say — the return goes the other way and HMRC repays you. For anything used partly for business and partly personally, you reclaim only the business proportion, and you need to be able to justify how you split it.
VAT penalties: what registering, filing or paying late costs
HMRC treats three kinds of lateness separately, and the costs add up.
Registering late. You have to register within 30 days of the end of the month in which you went over the threshold. Miss that and you must still pay VAT on every sale made since the date you should have registered, and you may get a penalty that depends on how much you owe and how late you are.
Filing a return late. Late returns work on points. Each late return, including a nil or repayment return, earns one penalty point. Reach the threshold for how often you file and you get a £200 penalty, then another £200 for every late return after that while you stay at the threshold.
Paying late. Nothing is charged for the first 15 days. From day 16 the first penalty is 3% of the VAT you owed at day 15. From day 31 it becomes 3% of what you owed at day 15 plus 3% of what is still unpaid at day 30, and a second penalty starts running at 10% a year on the outstanding balance, charged daily.
Penalty rules as published by GOV.UK for late returns and late payment, checked October 2026.
What makes a VAT invoice valid
An invoice that doesn't meet HMRC's requirements can have the input VAT claim behind it refused, which makes this worth getting right once rather than fixing under audit. The threshold is £250 including VAT: above it you need a full VAT invoice, at or below it a simplified one will do.
A full VAT invoice must show your name, address and VAT registration number; the customer's name and address; a description of what was supplied; the quantity or extent of it; the VAT rate and the amount payable excluding VAT; the gross total excluding VAT; the rate of any cash discount offered; and the total VAT chargeable.
A simplified invoice for supplies of £250 or less needs only your name, address and VAT number; the time of supply; a description good enough to identify what was sold; the total payable including VAT; the gross amount for each VAT rate; and the rate itself.
Two things people get wrong. A till receipt without a VAT number on it is not a VAT invoice, and won't support a claim. And you cannot show VAT on an invoice at all until your VAT number arrives — the usual workaround while you wait is to invoice the VAT-inclusive total without breaking VAT out, then reissue proper VAT invoices once you're registered.
Reclaiming VAT on things you bought before registering
Registration isn't a hard cutoff. You can go back and reclaim input VAT on some pre-registration purchases, with different limits depending on what you bought:
Four years is long enough to cover equipment, stock and tools bought while you were building the business. It's a genuinely valuable first return for anyone who registered after trading for a while, and it's routinely left unclaimed because people assume registration draws a line under everything before it.
Reclaiming VAT on a car, and on fuel
A car is where the answer to "can I reclaim it?" is most often no. You might be able to reclaim all the VAT on a new car only if it is used purely for business, and you must be able to show there is no personal use, for example because an employee's contract says so. Travelling between home and a normal place of work counts as personal use, which is where most claims fall down.
There are exceptions. You might be able to claim all the VAT on a new car that is mainly used as a taxi, for driving instruction or for self-drive hire. A used car bought for business only qualifies if the sales invoice shows the VAT. Hiring is treated differently: you can usually claim 50% of the VAT on the hire charge for a car that replaces a company car that's off the road, and all of it if you hire a car for business use only for no more than 10 days.
Fuel comes with a choice of its own:
You can also choose not to reclaim any VAT on fuel, which makes sense when your business mileage is so low that the fuel scale charge would be higher than the VAT you could reclaim. That choice covers the whole business: skip it for one vehicle and you can't reclaim fuel VAT for any of them.
As published by GOV.UK, checked October 2026.
The Flat Rate Scheme, and when it stops making sense
The Flat Rate Scheme lets you pay HMRC a fixed percentage of your gross turnover instead of tracking input and output VAT line by line. You can join if your VAT turnover is £150,000 or less, excluding VAT. You still charge customers the normal 20%; you simply keep the difference between that and your flat rate.
The catch is that you generally can't reclaim input VAT on your purchases under the scheme. Before 2017 that made it attractive for service businesses with few costs, but the limited cost business rule reversed it. If your spend on relevant goods is under 2% of turnover, or under £1,000 a year, you pay a flat 16.5% of gross turnover instead of your sector rate. Services and capital purchases of any value are excluded from that test — software, accountancy, rent, subcontractors and a new laptop all fail to count — which puts most consultants and agencies in the 16.5% band. At that rate you hand over close to the full 20% you charged and still can't reclaim, so the standard scheme is usually cheaper. The scheme works best for businesses that genuinely buy goods: caterers, retailers, trades with real materials. Because your costs change year to year, a percentage that paid off when you joined can quietly become the more expensive option — worth re-checking annually rather than setting once.
The Cash Accounting Scheme: pay VAT when your customer pays you
Under standard VAT accounting, what you owe is based on your invoices, whether or not they have been paid. The Cash Accounting Scheme changes the timing: you pay VAT on your sales when your customers pay you, and reclaim VAT on your purchases when you have paid your supplier. For a business with slow-paying clients, that stops you handing HMRC money you haven't received yet.
You can't use it alongside the Flat Rate Scheme, which has its own cash-based method, and you can't join if you're behind with your VAT returns or payments or have committed a VAT offence in the last 12 months. The trade-off sits on the purchase side: you also wait to reclaim VAT until you've actually paid your suppliers.
As published by GOV.UK, checked October 2026.
Bad debt relief when a client never pays
If you've invoiced VAT, paid it over to HMRC, and then never got paid, you can reclaim that VAT back. The debt generally needs to be at least six months overdue, and written off in your accounts.
The same six-month rule runs in the other direction, which is the part that surprises people: if you haven't paid a supplier within six months of the supply date or the due date — whichever is later — you're required to repay the input VAT you already reclaimed on it.
UK figures and rules here were checked against HMRC guidance on GOV.UK, but VAT rules change and individual circumstances vary widely. Confirm anything you're relying on with HMRC directly or with an accountant before filing.
Cancelling your VAT registration: when you must and when you can
You must cancel your registration if you're no longer eligible to be VAT registered, and you have 30 days to do it or you might be charged a penalty. You can also ask HMRC to cancel it if your taxable turnover falls below £88,000, a little under the £90,000 that triggers registration.
HMRC confirms the cancellation, usually within 40 working days, and gives you an official cancellation date. You stop charging VAT from that date and submit a final VAT return for the period up to and including it. One rule catches people out: if you reclaimed, or could have reclaimed, VAT on stock and other assets you still hold on that date, and the total VAT due on them is over £1,000, you have to account for it.
As published by GOV.UK, checked October 2026.
Three checks that catch a wrong VAT calculation
Most VAT errors aren't arithmetic — they're a correct sum run in the wrong direction. Three quick checks catch nearly all of them.
- 1. VAT should never be larger than the net amount. Unless your rate is over 100%, which basically never happens, the tax is always the smaller of the two figures. If it isn't, something has gone wrong upstream of the calculator.
- 2. The total should move the way you expect. Adding VAT makes the number bigger; removing it makes the number smaller. If you meant to add tax and the result came out smaller, the mode toggle is set the wrong way — the most common VAT mistake there is, and the one that roughly doubles your error.
- 3. Re-check after every rate change. Sellers on marketplaces and store platforms have found their own checkout miscalculating VAT for months before anyone noticed, usually after a rate change or a new country was added to their setup. A manual check against a calculator like this one catches it before it becomes an accounting problem.