Reverse VAT is a calculation that works out the VAT amount and net price from a gross total. It is the opposite of a standard VAT calculation, which adds VAT to a net price.

What is the standard VAT rate in the UK?

At the time of writing, the standard VAT rate is 20%. The reduced rate is 5% and the zero rate is 0%. Some items are exempt from VAT entirely.

When would I use reverse VAT?

You would use reverse VAT when you have a gross total and need to work out the VAT amount and net price. This is useful for checking invoices, pricing products, and preparing VAT returns.

Can I use reverse VAT for 5% and 0% rates?

Yes. The reverse VAT calculator works for all VAT rates. For 5% VAT, divide by 1.05. For 0% VAT, the net price is the gross total and VAT is zero.

Reverse VAT Calculator UK

What the Calculator Results Mean

The calculator shows three key figures that help you understand the VAT content of a gross total.

Net price is the price before VAT. This is the amount you would pay if the item were zero-rated or if VAT did not apply. It is the basis for calculating the VAT amount.

VAT amount is the actual VAT included in the gross total. This is the amount you can reclaim on business purchases or the amount you have charged to customers.

Gross total is the total price including VAT. This is the figure you start with when using the reverse VAT calculator.

The calculator also shows the formula used for the calculation, so you can verify the figures and understand the maths behind the result.

The calculator shows net price, VAT amount, and gross total. It also displays the formula so you can verify the figures.

Example Calculation

The following example is illustrative only and assumes standard VAT rates apply with no special circumstances.

For a gross total of £120, the calculator shows the net price and VAT amount for the standard 20% rate.

The net price is the gross total divided by 1.2. For £120, the net price is £120 ÷ 1.2 = £100. The VAT amount is the gross total minus the net price, which is £120 - £100 = £20.

For the 5% reduced rate, the net price is £120 ÷ 1.05 = £114.29, and the VAT amount is £120 - £114.29 = £5.71. For the 0% rate, the net price is £120 and the VAT amount is £0.

The example shows the gross total, net price, VAT amount, and the effective tax rate for each VAT rate.

A gross total of £120 at 20% VAT contains £20 VAT and a net price of £100. At 5% VAT, the net price is £114.29 and VAT is £5.71. This example is illustrative only.

Reverse VAT Calculation Formula

The reverse VAT calculation uses a simple formula to work out the net price and VAT amount from a gross total.

Standard VAT (20%): The net price is the gross total divided by 1.2. For example, £120 ÷ 1.2 = £100. The VAT amount is the gross total minus the net price, or the gross total multiplied by 20/120. For £120, the VAT is £120 × 20/120 = £20.

Reduced VAT (5%): The net price is the gross total divided by 1.05. For example, £105 ÷ 1.05 = £100. The VAT amount is the gross total minus the net price, or the gross total multiplied by 5/105. For £105, the VAT is £105 × 5/105 = £5.

Zero VAT (0%): The net price is the gross total and the VAT amount is zero. For example, £100 ÷ 1 = £100.

The formula for working out the VAT amount from a gross total is: VAT = Gross × Rate / (100 + Rate). For 20% VAT, this is Gross × 20/120. For 5% VAT, this is Gross × 5/105.

The reverse VAT formula is: VAT = Gross × Rate / (100 + Rate). For 20% VAT, this is Gross × 20/120. The net price is Gross minus VAT.

When to Use Reverse VAT

Reverse VAT calculations are useful in several situations. Understanding these helps you apply the calculation correctly.

Checking invoices: When you receive an invoice showing a gross total but not the VAT amount separately, you can use reverse VAT to check the VAT is correct. This is particularly useful if you need to reclaim VAT on business purchases.

Pricing products: If you know the gross price you want to charge customers, you can work out the net price and VAT amount using reverse VAT. This helps you set prices and understand your margin.

Reconciling accounts: When reconciling bank statements or sales records, reverse VAT helps you allocate VAT correctly. This is important for accurate accounting and VAT returns.

Checking VAT rates: If you are unsure whether the correct VAT rate has been applied, reverse VAT can help you verify the rate by checking the relationship between the gross and net figures.

For businesses that need to handle multiple VAT rates, the calculator makes it easy to check each rate quickly.

Reverse VAT is useful for checking invoices, pricing products, reconciling accounts, and verifying VAT rates. It helps you work out the VAT amount from a gross total.

Common VAT Rates in the UK

Understanding the different VAT rates in the UK is essential for correct reverse VAT calculations. Using the wrong rate gives incorrect results.

Standard rate (20%): This is the most common rate and applies to most goods and services. Examples include adult clothing, electronics, furniture, and professional services such as accounting and legal advice.

Reduced rate (5%): This applies to certain goods and services such as children's car seats, energy-saving materials, some medical products, and domestic fuel and power. It also applies to some hospitality services such as hot takeaway food.

Zero rate (0%): This applies to items such as books, newspapers, children's clothes and shoes, most food (excluding hot food), and certain medical supplies. Zero-rated items are still VAT-able but at 0%, so no VAT is charged.

Exempt items: Some items are exempt from VAT entirely and are not subject to any VAT rate. Examples include insurance, financial services, and certain education and health services.

When using the reverse VAT calculator, it is important to confirm the correct VAT rate for the goods or services you are checking.

The standard VAT rate is 20%. The reduced rate is 5%. The zero rate is 0%. Some items are exempt from VAT entirely. Always check the correct rate before calculating.

Common Mistakes

Several common mistakes can lead to incorrect reverse VAT calculations. Understanding these helps you avoid errors.

Using the wrong VAT rate. The most common mistake is using the wrong VAT rate. Always check whether the item is standard-rated (20%), reduced-rated (5%), zero-rated (0%), or exempt. Using the wrong rate gives incorrect results.

Misunderstanding gross and net. The gross total includes VAT. The net total does not. When using reverse VAT, make sure you are starting with the gross total. If you start with a net total, you need a standard VAT calculation, not a reverse one.

Rounding errors. VAT calculations often involve rounding. The reverse VAT calculator uses standard rounding rules, but manual calculations can introduce rounding errors. Always check your figures carefully.

Forgetting about exempt items. Exempt items are not subject to VAT. If you use reverse VAT on an exempt item, you will incorrectly calculate VAT that does not exist.

Using the calculator reduces the risk of these errors by automating the calculation and applying the correct rates.

Common mistakes include using the wrong VAT rate, misunderstanding gross and net, rounding errors, and forgetting about exempt items. The calculator helps reduce these errors.

Reverse VAT Calculator UK

How this calculator works

Example calculation