How to calculate VAT on calculator?

Following these simple steps can help you to calculate VAT amount and price including/excluding VAT manually on calculator.

Adding VAT Formula

If you want to add VAT to original figure, to divide the amount by 100 and then multiply by (100 + VAT percentage). That's all, you got inclusive of VAT value (Gross amount).

Price plus VAT calculation

For example, we will calculate VAT at a standard UK VAT rate of 20. If your business sells goods and services for £500

First, you need to divide the amount by 100 per cent
Then multiply this value by 120 per cent
After the calculation, we get £600, which is the price including VAT

We will calculate VAT at a reduced VAT rate of 5. If your business sells goods and services for £1000

First, you need to divide the price excluding VAT by 100 percentage
Then multiply this value by 105 percentage
We get gross amount £1050 - the price VAT inclusive
It turns out that the VAT amount is £50

Removing VAT Formula

If you want to subtract VAT from a figure (to make a reverse VAT calculation), to divide the amount by (100 + VAT percentage) and then multiply by 100. Now you know the amount exclusive of VAT (Net amount).

Price minus VAT calculation

For example, we will calculate VAT at a standard UK VAT rate of 20. If your business sells goods and services for £500

First, you need to divide the gross price by 120 per cent
Then multiply the value obtained by 100 per cent
We get £416.67, which is the price excluding VAT

We will calculate VAT at a reduced VAT rate of 5. If your business sells goods and services for £1000

First, you need to divide the price including VAT by 105 percentage
Then multiply the value obtained by 100 percentage
We get net amount £952.38 - the price without VAT
Accordingly, the VAT amount is £47.62

Calculate VAT in Excel

If you need to calculate VAT for several goods at once, it is easier to use Excel than a our VAT calculator. I created a Excel spreadsheet – download, it's free.

Download spreadsheet

A simplified example of the VAT process

The following is an explanation of the VAT applied to coffee sold by a coffee shop owner in a store that contains coffee beans roasted by a nearby roaster with beans grown by a local farmer. Assume that the VAT is 20%. Each person or business involved in the chain must complete the government's VAT paperwork.

Fresh coffee beans first come from the local farmer. If the roaster pays a total of £5 per pound of fresh coffee beans, a VAT of £1 (£5 x 20%) is added to this cost, so that the farmer receives a total of: £6 for each pound of coffee beans from the roaster.

The roaster roasts the coffee beans and charges the coffee shop owner £10 per pound of roasted coffee beans. This means that the shopkeeper has to pay a total of £12 per pound, £10 for the roasted coffee beans and 20% VAT, which is £2. However, since the farmer has already paid the first £1 to the HMRC, the roaster only has to pay the government £1 in VAT.

A coffee shop owner can use each pound of roasted coffee beans to sell 5 cups of coffee at £4 each for a total of £20. For every 5 cups of coffee sold, the store owner receives a total of £24 from customers who bought his coffee, £20 and £4 VAT. However, since a total of £2 in VAT has already been paid to the state by the farmer and the roaster, the shopkeeper pays only £2 to the HMRC.