This VAT calculator adds VAT to a net price or strips it back out of a VAT-inclusive total. Pick a preset rate from the list, or type your own, then switch between adding and removing to see the net amount, the VAT, and the gross figure side by side. It is built for the everyday moments when you need the number quickly: pricing a job, checking a supplier's invoice, or working out how much of a till total is tax.
How VAT is calculated, with a worked example
Value added tax is charged as a percentage of the net selling price, so adding it is a single multiplication. Take the net price, multiply by the rate expressed as a decimal, and that is the VAT. Add it to the net price to get the gross, which is what the customer actually pays. Say you charge 850.00 for a piece of design work and the rate that applies to you is 20 percent. In the calculator above, choose the 20 percent preset, leave the mode on Add VAT, type 850, and all three figures appear instantly; change the preset to a reduced or zero rate and you can see at once how the gross changes for different kinds of supply.
- Net price: 850.00
- VAT at 20 percent: 850.00 × 0.20 = 170.00
- Gross total on the invoice: 850.00 + 170.00 = 1,020.00
- At a 5 percent reduced rate the same job would carry 42.50 of VAT and total 892.50
Reverse-calculating VAT from a gross price
The mistake nearly everyone makes at least once is to take a gross price and knock off the rate percentage. That gives the wrong answer, because the percentage was applied to the smaller net figure, not the larger gross one. To reverse the calculation you divide the gross by one plus the rate: at 20 percent, divide by 1.20; at 5 percent, divide by 1.05. Take a gross receipt of 240.00 at 20 percent as an example. The Remove VAT mode above does the division for you and shows the divisor it used, so you can check the working on a receipt or an expense claim without a spreadsheet.
- Net: 240.00 ÷ 1.20 = 200.00
- VAT: 240.00 − 200.00 = 40.00
- The wrong way: 240.00 less 20 percent = 192.00, which understates the net and overstates the tax by 8.00
What a VAT invoice needs to show
If you are registered for VAT, the invoice you issue is the document your customer relies on to reclaim the tax, so it has to carry more than an ordinary bill. Exact requirements are set by each country's tax authority, but the elements below appear in almost every set of rules and are a sensible checklist wherever you trade.
- Your business name, address, and VAT registration number
- A unique sequential invoice number and the date of issue, plus the date of supply if different
- The customer's name and address, and their VAT number where that is required for the type of sale
- A description of each item or service, with quantity, unit price excluding VAT, and the rate applied
- The net total, the VAT amount for each rate used, and the gross total payable
- Where an item is zero-rated or exempt, a note saying so rather than leaving the rate blank
Common VAT calculation mistakes
Beyond the reverse-calculation trap, a few errors come up again and again. Rounding each line's VAT and then adding the lines can produce a total a few pence or cents different from calculating VAT on the subtotal; pick one method and use it consistently so your invoices reconcile. Mixing rates on one invoice without showing the VAT for each rate separately makes the document hard for the customer to process. Applying VAT to a price that already includes it doubles up the tax, which is why it helps to label every figure clearly as net or gross. And quoting prices to business customers without saying whether VAT is included invites a dispute at invoice time.
Showing prices VAT inclusive or exclusive
Who you are selling to usually decides the format. Consumers expect to see the price they will pay, so retail prices are normally shown inclusive of VAT, with the tax broken out on the receipt. Business customers who can reclaim VAT care about the net figure, so trade quotes and invoices normally lead with the net price and show VAT as a separate line. Whichever you choose, say which it is: a quote that reads 1,000 plus VAT and one that reads 1,000 including VAT differ by a meaningful amount. Thresholds for registration, the rates for different goods, and the rules on what you can reclaim all vary by country, so check with your tax authority before relying on any figure for your return.
Frequently Asked Questions
How do I add VAT to a price?
Multiply the net price by the VAT rate as a decimal and add the result to the net price. For 850.00 at 20 percent, the VAT is 170.00 and the gross is 1,020.00. Select a preset rate above, or type your own, and the calculator shows net, VAT, and gross together.
How do I take VAT off a gross price?
Divide the gross amount by one plus the rate as a decimal: by 1.20 for 20 percent, 1.05 for 5 percent. The result is the net price, and the difference is the VAT. Do not simply subtract the percentage from the gross; that gives the wrong figure.
Which VAT rate should I use?
The rate depends on where you are registered and what you are selling. The presets above cover the standard rates most commonly needed, plus reduced and zero rates, but the correct rate for a particular supply is set by your tax authority, so check their guidance if you are unsure.
Why does my VAT total differ by a few pence from the invoice?
Usually because of rounding. Calculating VAT on each line and summing the results can differ slightly from calculating VAT on the subtotal. Both are generally acceptable if applied consistently; the calculator above works on the single amount you enter.
Do I need to charge VAT at all?
Only if you are registered for VAT, and registration rules and thresholds vary by country. If you are not registered you should not add VAT or show a VAT amount on your invoices. If you are close to a threshold or trade across borders, check with your tax authority or an accountant.