VAT Calculator

What does this VAT calculator do?

This VAT calculator converts between three figures: the net price before Value Added Tax, the VAT itself and the gross price the customer pays. VAT always starts from the net amount, so the gross price is the result of the calculation, not its base. As a result, you have two directions: add VAT to a net figure, or extract the VAT hidden inside a gross figure.

• Net (excl. VAT): the amount the tax applies to.
• VAT amount: the tax at the rate you choose.
• Gross (incl. VAT): the total the buyer pays.

I use it most in two situations: turning a supplier quote marked "+ VAT" into a real budget, and working out how much of a shop's shelf price is actually revenue. When my team and I set up price lists during e-commerce consulting projects, keeping those two directions apart is the first thing we check. Everything runs in your browser, so no amount you type leaves your device.

Which VAT rate should you choose?

The presets cover the rates I meet most often: 20% and 5% for the UK and 19% for Germany. GOV.UK lists three UK rates: the standard rate of 20% for most goods and services, a reduced rate of 5% for items such as children's car seats and home energy, and a zero rate for things like most food and children's clothes.

Zero-rated and exempt are not the same thing, even though neither adds VAT to the price:

• Zero-rated sales still count as VAT taxable turnover; they simply carry a 0% rate.
• Exempt sales, such as postage stamps and financial and property transactions, stay outside taxable turnover altogether.

That difference also matters for the registration threshold, which I cover further down. For other countries, type the rate into the Custom box. Germany's reduced 7% rate, for example, has no preset, so you enter 7 yourself. Rates and their scope change, so check the official source for the country you invoice in before you file anything.

How do you get the VAT figure from a simplified invoice?

Small receipts often show only the total and the rate. HMRC's record keeping guidance (VAT Notice 700/21) allows a simplified invoice when the supply is £250 or less including VAT. For each rate, it needs to show the total amount payable including VAT and the VAT rate charged, not a separate VAT line.

Still, if you keep your own books, you need that VAT figure. Next, switch the calculator to Extract VAT, enter the total and pick the rate printed on the receipt. For example, an £84.00 receipt at 20% splits into £70.00 net and £14.00 VAT.

• Enter the total exactly as it appears, without the £ sign.
• If the receipt mixes rates, split it by rate first and run each part separately.
• Keep the receipt itself; the calculator helps you read it, it doesn't replace it.

Whether you can reclaim that VAT depends on your registration status and your records. That is a question for your accountant rather than for a calculator.

How does VAT rounding work on an invoice?

The calculator works on the whole amount you enter and rounds each result to two decimals. Accounting software often calculates VAT line by line instead, which can move the total by a penny or two.

Example: three lines at £12.34 net each, taxed at 20%. Line by line, each VAT figure of £2.468 rounds to £2.47, so the three lines add up to £7.41. Enter the combined net of £37.02 in the calculator and the VAT comes out at £7.40.

HMRC's VAT guide (VAT Notice 700, paragraph 17.5) sets out the rounding rules. Invoice traders may round the total VAT on an invoice down to a whole penny, line level calculations follow their own rules, and HMRC says the round down concession generally doesn't suit retailers. In practice:

• Treat the figure on the issued invoice as the one that counts in your records.
• Use the calculator for quotes and quick checks instead.
• If the gap is more than a few pence, suspect a wrong rate or the wrong direction first.

Do you need to charge VAT at all?

Only VAT-registered businesses charge VAT. In the UK you must register when your VAT taxable turnover for the last 12 months goes over £90,000, according to GOV.UK. Taxable turnover means everything you sell that is not exempt or out of scope, so zero-rated sales count towards it.

Below the threshold and without registration, you invoice without VAT. The calculator still helps on the buying side: VAT-registered suppliers charge you VAT, and extracting it shows the net price you are really comparing. As a non-registered business you generally cannot reclaim that VAT, so the gross price is your true cost.

Pricing decisions such as discounts also sit on top of this. I usually run the discount calculator first and only then add VAT, so the order of operations stays clean. Once you cross the threshold, rerun your price list in Add VAT mode; the same net price suddenly costs your customers more.

Using a VAT calculator for e-commerce margins and ad reports

The most expensive mistake I see in online shops is calculating margin on the VAT-inclusive price. VAT is not your revenue; you collect it and pass it on. Example: a product sold for £120 including 20% VAT brings in £100. If it costs you £70, your gross profit is £30, not £50.

The same mix-up also distorts ad reporting. A shop dashboard may show revenue including VAT while the ad platform reports spend excluding VAT. Before you put numbers into the ROAS calculator, bring both sides to the same basis, ideally net; otherwise a campaign looks more profitable than it really is.

• Work out margin and ROAS on net revenue.
• Label every report column that includes VAT.
• Recalculate net prices after every price change, not just the shelf price.

For a closer look at how those numbers feed your campaigns, my article on how to read a digital marketing report and the Google Ads management service my team and I run are good starting points.

How do you find the VAT rate from net and gross amounts?

When an invoice shows net and gross but the rate is missing or looks wrong, reverse the formula: divide gross by net, subtract 1 and multiply by 100. Example: £1,080 gross on £900 net gives 1,080 ÷ 900 = 1.20, so the rate is 20%.

I run this check in three situations:

• a supplier invoice where the stated rate and the totals don't match,
• an older invoice from a period when a different standard rate applied; HMRC's VAT guide still lists the 7/47 fraction for the old 17.5% rate,
• a marketplace export where the VAT column doesn't reconcile with sales.

If the rate you find isn't a preset, type it into the Custom box with a decimal point, such as 8.1. For other everyday percentage questions, however, the percentage calculator is quicker.