Reverse VAT Calculator

How to Calculate VAT Backwards

To remove VAT from a gross (VAT-inclusive) price, you need to divide the gross amount by the VAT multiplier — not subtract the percentage. This is what's known as calculating VAT backwards, and it's a surprisingly common source of errors on invoices and reconciliations.

The VAT calculation formula for removing VAT is:

A common mistake when trying to calculate VAT backwards is to simply subtract 20% from the gross amount. For example, 20% of £120 is £24, giving £96 — which is wrong. The correct net amount is £100, because VAT of £20 was added to £100 to get to £120. You must divide by 1.20 to reverse it correctly. Use the VAT calculator above to get the right answer instantly without having to work through the formula manually.

VAT Calculation Formula for All UK Rates

The same VAT calculation formula applies across all current UK VAT rates — just swap in the relevant rate:

Or written as a general formula: Net Amount = Gross Amount ÷ (1 + VAT Rate ÷ 100)

To find just the VAT portion: VAT = Gross − Net

This free VAT calculator handles all three UK rates automatically. Just select the rate, enter the gross amount, and it gives you the net amount and VAT breakdown straight away.

Current UK VAT Rates

The standard VAT rate of 20% applies to the majority of goods and services in the UK. The reduced VAT rate of 5% covers specific categories such as domestic fuel and children's car seats. The zero rate applies to essentials including most food and children's clothing.

Work Out VAT — When Do You Need to Remove VAT?

There are plenty of situations where you need to work out VAT from a gross price rather than add it. Common examples include:

• Received a VAT-inclusive invoice and need to see the net cost and VAT portion separately
• Checking supplier pricing to find the amount excluding VAT
• Reconciling bank statements where transactions include VAT
• Verifying receipt amounts against purchase orders
• Preparing VAT returns and checking VAT amounts on individual invoices
• Spot-checking figures outside of your accounting software

Use the VAT calculator on this page to quickly calculate VAT from the gross amount — it handles the maths so you don't have to.

Add or Remove VAT Online

This tool works both ways — you can add or remove VAT depending on what you need. To add VAT to a net (excluding VAT) amount, switch to "Add Tax" mode and enter the net price. To remove VAT from a VAT-inclusive price, use "Remove Tax" mode and enter the gross amount.

Whether you need to calculate VAT backwards from a receipt or add VAT to a quote, this VAT calculator UK tool covers both directions instantly. No sign-up, no download — just a free, straightforward tool for calculating VAT online.

Flat Rate VAT Scheme

If your business is VAT-registered under HMRC's Flat Rate Scheme, the standard reverse VAT calculation works slightly differently. Under the flat rate scheme, businesses charge VAT at the standard rate of 20% to customers but pay a lower flat rate percentage to HMRC — keeping the difference as a benefit.

When working out VAT under the flat rate scheme, you still charge VAT at 20% on your invoices, so customers can use the standard formula to calculate VAT backwards from your gross price. However, what you actually pay HMRC is based on the flat rate percentage for your industry, not the full 20%. For standard reverse VAT calculations on invoices you've received, the standard formula applies regardless.

Making Tax Digital and VAT Returns

Most VAT-registered businesses in the UK are required to submit VAT returns through Making Tax Digital (MTD) compatible software. MTD was introduced by HMRC to reduce errors and make VAT reporting more accurate — and tools like Xero and QuickBooks are fully MTD-compliant.

This reverse VAT calculator is useful for spot-checking individual amounts and verifying invoices, but for preparing and submitting full VAT returns you'll need MTD-compatible accounting software. If you're unsure whether your business needs to register for VAT or comply with MTD, check the current UK guidelines on the HMRC website.

Reverse VAT for Small Business

For small business owners who are VAT-registered, knowing how to calculate VAT backwards is a day-to-day necessity. Whether you're checking a supplier invoice, working out the VAT portion on a purchase, or verifying figures before sending them to your accountant, this free VAT calculator gives you the answer in seconds.

If you're not yet VAT-registered, you'll need to register once your taxable turnover exceeds £90,000 in any rolling 12-month period. From that point, you'll need to charge VAT on your sales and can claim VAT back on eligible business purchases — making it even more important to easily calculate VAT quickly and accurately.

Reverse VAT for Accountants and Bookkeepers

Extracting VAT from gross amounts is a routine task when reconciling client records, verifying purchase invoices, and preparing VAT returns. This VAT calculator online gives you a quick way to spot-check individual amounts without opening your accounting software.

For comprehensive VAT management, use MTD-compatible software like Xero or QuickBooks. This tool is best used alongside your main software — not as a replacement for it. And if you need to add VAT to a net amount rather than remove it, use our standard UK VAT Calculator instead.

VAT vs Corporation Tax vs Purchase Tax

It's worth a quick note on terminology. Value-added tax (VAT) is the consumption tax charged on goods and services provided in the UK. It replaced Purchase Tax in 1973. Corporation Tax is a separate tax on business profits and has nothing to do with VAT — the two are calculated and reported completely independently.

This calculator is specifically designed to calculate VAT online — for Corporation Tax queries, speak to a qualified accountant or check HMRC's guidance directly.