Calculate VAT amount, pre-VAT price and total price with VAT.
VAT (Value Added Tax) is an indirect consumption tax levied on goods and services at each stage of production and distribution. Unlike sales tax which is collected only at the final sale, VAT is collected throughout the supply chain with businesses claiming credits for VAT already paid. Our VAT calculator handles both adding VAT to a price and removing VAT from a VAT-inclusive amount.
Price Including VAT = Net Price × (1 + VAT Rate/100). VAT Amount = Net Price × VAT Rate/100. Example: A service costing £500 net with 20% VAT: VAT Amount = £500 × 0.20 = £100. Total = £500 + £100 = £600.
When you have a VAT-inclusive price and need the net price: Net Price = Gross Price / (1 + VAT Rate/100). VAT Amount = Gross Price − Net Price. Example: An item costs £360 including 20% VAT: Net Price = £360/1.20 = £300. VAT = £360 − £300 = £60.
Standard Rate (20%): Most goods and services — electronics, clothing, professional services, restaurants. Reduced Rate (5%): Children's car seats, home energy, sanitary products, some social housing. Zero Rate (0%): Most food (not restaurant meals), children's clothing, books, newspapers, prescription medicines. Exempt: Financial services, insurance, education, healthcare — no VAT charged and no input VAT reclaimed.
UK businesses with turnover above £85,000 must register for VAT. Once registered, businesses charge VAT on sales (output tax) and reclaim VAT paid on business purchases (input tax). Only the net difference is paid to HMRC. This makes VAT ultimately a tax on the end consumer — businesses are just the collection agents throughout the supply chain.
Value Added Tax (VAT), used across the European Union, UK, and many other countries worldwide, is collected at every stage of production and distribution, not just at the final point of sale like US-style sales tax. Each business in the supply chain charges VAT on what it sells and reclaims the VAT it paid on its own purchases, so the tax effectively lands on the final consumer, but the collection mechanism is fundamentally different from a single-stage sales tax, which is charged only once at checkout.
Travelers and online shoppers dealing with VAT-inclusive pricing (common in most VAT countries, unlike the US where sales tax is usually added at checkout) sometimes need to work backward from a final price to figure out the pre-tax cost or the VAT amount itself, especially for business expense reporting or VAT refund claims when leaving a country as a tourist.
Most VAT countries apply different rates to different categories of goods - a standard rate for most items, and reduced or zero rates for essentials like certain food, children's clothing, or books. Knowing which rate applies to a specific purchase matters for getting an accurate calculation, since simply assuming the standard rate can produce a meaningfully wrong result.
VAT (Value Added Tax) is a consumption tax added at each stage of production and distribution. The end consumer ultimately pays the full VAT amount.
Sales tax is collected only at the final point of sale. VAT is collected at each stage of the supply chain, with businesses claiming back VAT paid on inputs.
Price including VAT = Net Price × (1 + VAT Rate/100). To remove VAT: Net Price = Gross Price / (1 + VAT Rate/100).
The standard VAT rate in the UK is 20%. A reduced rate of 5% applies to some goods like children's car seats and home energy. Some items are zero-rated.
No, VAT is collected at every stage of production and distribution with businesses reclaiming what they paid, while sales tax is typically collected only once at the final point of sale.
No, most VAT systems apply a standard rate to most goods and reduced or zero rates to specific categories like food, books, or children's clothing.
In many countries, yes - VAT refund schemes exist for tourists on eligible purchases, though the process and eligibility rules vary by country.
