UK VAT runs on three published rates set by HMRC, not one universal number, so the correct calculation depends on what you're selling and which direction you're working in. This calculator does the arithmetic once you know which rate applies: add VAT to a net price you're about to quote, or back the VAT out of a total that already includes it. It won't tell you which rate your product or service falls under -- that's a classification question, not a maths one -- but it will get the numbers right every time once you've picked the rate.
How it works
In add mode, you enter a net (pre-VAT) price and pick a rate. The VAT amount is the price times the rate, and the total is the price plus that VAT -- the calculation most people picture when they think "add VAT."
Remove mode solves the opposite problem, and it's the one people get wrong by hand. If a total already includes VAT -- a receipt, a VAT-inclusive listed price, a lump sum a client paid you -- you can't just subtract the rate from the total, because the rate was applied to the net price, not to the total itself. Instead, the total equals the net price times (1 + rate), so dividing the total by (1 + rate) recovers the original net price. The VAT is whatever's left after subtracting that net price from the total.
Both modes round each pound figure to the penny from the unrounded math, so the VAT and the total or net amount always add up correctly against each other, whichever direction you're solving.
Worked example
A £1,000 net price at the standard 20% rate, in add mode:
- VAT: £1,000 × 20% = £200
- Total (inc. VAT): £1,000 + £200 = £1,200
Now flip it: a client's invoice shows a £120 total that already includes 20% VAT, and you need the net figure for your books. Divide, don't subtract:
- Net amount: £120 ÷ 1.20 = £100
- VAT: £120 − £100 = £20
Notice the VAT isn't 20% of £120 (that would overstate it at £24) -- it's 20% of the net £100, which comes out to exactly £20. That gap is the whole reason remove mode exists as its own calculation instead of a quick mental shortcut. The same logic applies at the reduced 5% rate, and at the zero rate the VAT amount is simply £0 in either direction.
How to interpret your result
The figure you actually want depends on why you're calculating. Quoting a client or pricing a product for sale: use add mode, and the total is what you charge and what a VAT-registered buyer sees on the invoice. Reconciling a receipt, pulling VAT out of a lump-sum payment, or working out your real net revenue from a VAT-inclusive figure: use remove mode, and the net amount is your actual sales figure, not the total.
Picking the right rate matters more than the calculation itself. Most goods and services are standard-rated at 20%. A shorter list -- home energy, children's car seats, and a handful of other categories -- is reduced-rated at 5%. Another list -- most food, books, and children's clothes among them -- is zero-rated, which is different from being VAT-exempt (exempt supplies, like most financial services and postage stamps, sit outside the VAT system entirely and aren't covered by this tool). If you're not certain which bucket your product or service falls into, check gov.uk/vat-rates before you rely on the output here for an actual invoice or return.
This tool also doesn't tell you whether you need to be charging VAT at all. UK VAT registration is generally required once your taxable turnover over any rolling 12-month period passes £90,000 (the threshold gov.uk currently publishes), with different rules for some non-UK sellers who must register from their first UK sale. Below that threshold you may not be VAT-registered, in which case none of this applies to your prices in the first place.
Methodology & sources
Add mode: vatAmount = round2(amount × rate / 100), total = round2(amount + vatAmount). Remove mode: netAmount = round2(amount / (1 + rate / 100)), vatAmount = round2(amount − netAmount), with total equal to the VAT-inclusive amount you entered. This is standard percentage-of-base arithmetic, not a VAT rule -- it doesn't classify goods or services into rate categories, doesn't know about VAT exemptions, and doesn't check registration status.
Rates used (standard 20%, reduced 5%, zero 0%) are taken from gov.uk, "VAT rates on different goods and services", current as of this writing. The £90,000 VAT registration threshold referenced above is from gov.uk, "Register for VAT: When to register". Both rates and thresholds are set by Parliament and HMRC and can change -- re-check gov.uk directly before relying on this for a real invoice, return, or registration decision, and treat this calculator as arithmetic, not tax advice.