Reverse VAT Calculator

When this calculator helps

Reach for this tool whenever you are holding a VAT-inclusive figure and need to pull the tax back out of it. The classic case is a till receipt or a supplier invoice that shows only the gross total: to record the purchase properly, or to reclaim the VAT on a business expense, you need the net cost and the VAT split out separately. This calculator does that split in one step.

It earns its keep in everyday UK bookkeeping. Sole traders reconciling expenses, small businesses preparing a VAT return, and anyone raising an invoice from a known gross price all need to work backwards from the total. It is just as handy for curiosity — seeing how much of a shop price is actually tax — but the real day-to-day value is in keeping your records straight.

How to read your result

The calculator gives you two numbers from the gross price you entered: the net amount (the value of the goods or service before VAT) and the VAT portion (the tax sitting on top). Add them together and you are back at the gross. For accounting, the net is what goes against your expense or sales figure and the VAT is what goes in your VAT account.

The key idea is that you divide the gross by one plus the rate, not simply take the rate off the gross. At 20% the gross is 120% of the net, so the net is the gross divided by 1.20. Taking 20% straight off the gross over-counts the tax, because that treats the VAT as a slice of the gross rather than of the smaller net figure it is actually charged on.

A worked example

Suppose a supplier invoice shows a gross total of £240 and you know the standard 20% rate applies. Divide £240 by 1.20 to get a net of £200. The VAT is the difference, £40. So your records show £200 of expense and £40 of reclaimable VAT. Notice that simply taking 20% of £240 would have given £48 — too much — which is exactly the trap the divide-by-1.20 method avoids.

Common mistakes to avoid

Most reverse-VAT errors come from rushing the arithmetic or assuming the wrong rate. A quick check against these will keep your figures right.

• Subtracting 20% of the gross instead of dividing by 1.20 — this overstates the VAT and understates the net.
• Using the standard 20% rate on something that is actually reduced-rated at 5% or zero-rated, such as certain energy, children's items or most food.
• Reverse-calculating a price that was never VAT-inclusive in the first place, such as a VAT-exclusive B2B quote.
• Rounding the net and the VAT independently so they no longer add back to the exact gross.

UK VAT rates and notes

In the UK the standard VAT rate is 20%, and it applies to most goods and services. A reduced rate of 5% covers a defined list including domestic energy, children's car seats and some home-energy-saving materials, while a zero rate applies to most food, children's clothing, books and newspapers — zero-rated still being a taxable supply, just at 0%. Some supplies are exempt entirely, which is different again from zero-rated.

Because the rate drives the whole calculation, the single most important step is choosing the right one for the item in question. If an invoice mixes standard and reduced-rate lines, work each line out separately rather than applying one blended rate to the whole total. For anything beyond the basic maths, HMRC's VAT guidance is the authoritative source.