This online calculator shows you how to calculate VAT from a net or gross figure. Simply enter the net or gross value, and the form will automatically calculate the relevant values.
The current system was introduced just after the UK's entry into the European Economic Community (EEC) on 1st January 1973. It replaced the previous Purchase and Selective Employment Tax. The Chancellor announces any changes during The Budget or Autumn Statements.
Rates across Europe vary with Germany at 19%, France at 20%, Ireland at 23% and Italy 22%. The lowest tax rate is in Liechtenstein and Switzerland at just 8%. Other countries including the 52 states in the USA may have different sales tax charges.
Most exceptions incur a lower rate of tax as follows:
Businesses not registered for VAT should not charge it for sales invoices. You have to register if your turnover for the previous 12 months or 30 day period is over a certain threshold. The current threshold is £82,000 for the tax year ending April 5th, 2016.
Most businesses complete a VAT return each quarter. If output tax exceeds input tax, then the difference is paid to HM Revenue and Customs (HMRC). If the reverse is true, then HMRC provide a refund.
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The code must appear exactly as it does above. Otherwise, it won't work. If you like this widget, you may also like our mortgage repayment calculator widget that you can also add for free to your website.
If you have a gross amount and want to determine the net value, then simply divide the gross value by 1.20 to provide the net value. For example, an invoice that includes VAT totalling £150 would have a VAT amount of £25 with the net value at £125. This result is calculated by dividing £150 by 1.2 which gives the net value of £125 with the difference being the tax at 20%.
If you have a figure you want to add VAT against, multiply by 0.20% to find the VAT value or 1.20 to find the gross value including VAT. For example, an invoice of £125 multiplied by 20% provides a VAT figure of £25.
The net amount is the value you use in your accounts for purchases and sales if you're a VAT registered company.
This page was last reviewed on 18th September 2015 and has the latest rates from HMRC.