How this calculator works
In the UK and across the EU, prices shown to consumers are normally VAT-inclusive — the sticker price already has value-added tax baked in, unlike US sales tax, which is added at the till. That makes two calculations useful: working out what VAT was charged inside a price you already paid, and working out what a net (VAT-exclusive) price from a trade supplier or B2B invoice will cost once VAT is added.
The rate field defaults to 20%, the UK standard rate, but VAT is not one flat number — many goods and services qualify for a reduced rate or are zero-rated, and rates differ by EU member state. Always enter the rate that actually applies to your purchase; treat any rate mentioned in this content as a labeled example, not a guarantee, and check the current figure with HMRC or your country's tax authority if it matters for your accounts.
The formulas
Add VAT: VAT = net × (rate ÷ 100); gross = net + VATExtract VAT: net = gross ÷ (1 + rate ÷ 100); VAT = gross − netThe two directions are exact inverses of each other — adding VAT to a net price and then extracting it at the same rate returns the original net price to the penny.
Worked example: extracting 20% VAT from a receipt
- A receipt shows £120.00 total, with VAT included at the UK standard rate of 20%.
- Net price: 120 ÷ 1.20 = £100.00.
- VAT amount: 120 − 100 = £20.00.
- Common mistake: taking 20% of the £120 gross gives £24.00 — wrong, because the 20% was charged on the £100 net price, not the £120 that includes VAT.
Frequently asked questions
Why are UK and EU prices shown including VAT while US prices are not?
Convention. VAT-registered EU and UK businesses selling to consumers must display VAT-inclusive prices, so the calculation most people need is extracting the VAT from a price they already see, not adding it. US sales tax is usually added at checkout instead — see the sales tax calculator for that direction.
Why can't I just take 20% of the gross price to find the VAT?
Because the 20% rate was applied to the net price, which is smaller than the gross price. On a £120 gross price at 20%, the VAT is £20 (20% of the £100 net), not £24 (20% of £120). Divide by 1 + rate ÷ 100 first, then subtract.
What are the UK's reduced and zero VAT rates?
As commonly published examples: the UK standard rate is 20%, a reduced rate of 5% applies to items like domestic energy, and a 0% zero rate applies to most food, children's clothing, and books. Rates and categories can change, so check the current list on HMRC's website before relying on a specific figure for accounts or pricing.
Do I need to register for VAT?
That depends on your turnover and is a business decision, not something this calculator determines. VAT registration thresholds and rules change periodically — check the current requirements with HMRC (or your country's tax authority if you trade outside the UK) before deciding.
Does this work for EU countries other than the UK?
Yes — the arithmetic is identical everywhere VAT is charged. Standard rates vary by country (many EU member states sit between 17% and 27%), so replace the default 20% with the rate that applies where the sale takes place.