VAT (Value Added Tax) is a consumption tax applied to goods and services. In the UK, the standard rate is 20%. The reduced rate is 5% (for items like domestic fuel and children's car seats). Some items are zero-rated or exempt.

How do I remove VAT from a price?

Divide the gross price by (1 + VAT rate/100). For example, to remove 20% VAT from $120: $120 ÷ 1.20 = $100 net price.

What is the VAT rate in different countries?

VAT rates vary by country. UK standard rate is 20%. Germany and France are 19–20%. Netherlands is 21%. Ireland is 23%. The USA uses sales tax instead of VAT, which varies by state.

VAT Calculator — Add or Remove VAT from Any Amount

Net Price (excl. VAT)

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Gross (incl. VAT)

About the VAT Calculator

Value Added Tax (VAT) is a consumption tax collected at each stage of production and distribution. Unlike sales tax applied only at the point of sale, VAT is collected throughout the supply chain, with businesses reclaiming VAT paid on their inputs. The end consumer bears the full tax cost. In the UK, the standard VAT rate is 20%, with a reduced rate of 5% on certain goods and zero rating on essentials like most food, children's clothing, and books.

UK VAT rates

Standard rate — 20% — most goods and services
Reduced rate — 5% — domestic fuel, child car seats, certain energy-saving products
Zero rate — 0% — most food, books, newspapers, children's clothing
Exempt — financial services, insurance, education, and health services

VAT registration threshold

UK businesses must register for VAT when taxable turnover exceeds the registration threshold (£90,000 as of April 2024). Once registered, you charge output VAT on sales, reclaim input VAT on purchases, and pay HMRC the difference quarterly via a VAT return.

VAT on digital services and B2B

VAT rules have specific provisions that matter for businesses. B2B sales to VAT-registered EU businesses since Brexit are generally zero-rated (reverse charge applies). Digital services sold to EU consumers require compliance with the EU's OSS (One Stop Shop) scheme. Businesses below the registration threshold can use the Flat Rate Scheme, which simplifies returns.

Reverse charge — for B2B services to VAT-registered customers in other countries, the customer accounts for VAT
EU digital services — UK businesses selling digital products to EU consumers must register for EU VAT or use OSS
Flat Rate Scheme — pay a fixed % of gross turnover; simpler but may cost more than standard VAT accounting
VAT groups — related companies can register as a single VAT group, eliminating VAT on inter-company supplies

Frequently Asked Questions

How do I add VAT to a price?

Multiply the net (ex-VAT) price by 1 plus the VAT rate. For 20% UK VAT: net x 1.20. Example: 50 x 1.20 = 60 gross. The VAT amount is 10.

How do I remove VAT from a gross price?

Divide the gross (VAT-inclusive) price by 1 plus the VAT rate. For 20% VAT: gross / 1.20. Example: 60 / 1.20 = 50 net. The VAT content is 60 - 50 = 10. Never simply multiply by 0.80 — that gives a slightly wrong answer.

What is the difference between VAT and sales tax?

Sales tax is applied only at the final retail point of sale. VAT is applied at every stage of the supply chain, but businesses reclaim VAT on their purchases, so only the end consumer bears the full cost. Both result in the same tax burden on the consumer for the same rate.

Do I need to register for VAT in the UK?

You must register if your taxable turnover exceeds the threshold (90,000 as of April 2024). You can also register voluntarily below the threshold, which lets you reclaim input VAT on business purchases. Some businesses with mostly zero-rated sales register voluntarily to reclaim VAT refunds.

How do I calculate VAT from a gross amount?

For the UK 20% standard rate: VAT = Gross / 6 (because 20/120 = 1/6). Example: 120 gross / 6 = 20 VAT, 100 net. For the 5% reduced rate: VAT = Gross / 21 (because 5/105 = 1/21). Example: 105 gross / 21 = 5 VAT, 100 net.