VAT calculator

VAT can be confusing. Not every business charges VAT as they may not turning over enough to be VAT-registered. Then there are different rates of VAT depending on the nature of the goods or services being sold. Our VAT calculator looks just at the standard rate of VAT which is currently 20%. This applies to most goods.

Whether you’re working out how much VAT to charge customers or figuring out how much VAT you’ll be charged by suppliers, our VAT calculator will help you breakdown the costs. For example:

• You want to work out how much VAT will be charged on £1,000 (gross).
• The net figure before VAT is applied is £833. 
• The VAT figure will make up the remaining £166.67 – making your gross figure £1,000. 

Informi is your one-stop information point for all things small business. We’re experts in delivering finance guidance – with 100s of articles covering small business taxes, VAT, and national insurance. Our VAT online calculator is designed to help you quickly work out your VAT liabilities. 

There are some occasions when you will be required to calculate reverse VAT. This is when you have a price that includes VAT but need to find the value before VAT – perhaps to give on a quote or price up in a shop.

To calculate this amount:

1. Take the total amount including VAT
2. Divide it by 1. +VAT%
3. This gives you the price before VAT
4. The amount of VAT that is due is the difference between these two numbers

Thus, on an item with a price of £150 and a VAT rate of 20%, the calculation is as follows:

1. £150
2. £150 20
3. = £125
4. VAT is £150 – £125 = £25

You can then double-check this by adding the VAT rate onto the new price, with the result being the old price (£125 + 20% = £150).

VAT numbers are given to businesses that are VAT registered and are also known as a VAT registration number or VRN. They are different from the Unique Taxpayer Reference Number or Company Registration Number.

For example, if you are displaying your own VAT number or setting up a new purchase ledger account for a supplier, you should always check that the VAT number is correct. If the VAT number is incorrect, this will result in the tax invoice being incorrect, and it is possible that HMRC will reject your input tax claim.

A UK VAT number is 9 digits long plus often with a GB at the beginning –

in the format G B _ _ _ _ _ _ _ _ _.

There is a mathematical formula that is used whereby the first 7 digits are random numbers, and the last 2 are based on this formula. By checking this mathematical rule, you can verify that the VAT number is valid (although not that it necessarily correlates to that particular business).

You can check on the government website or telephone the HMRC VAT Helpline on 0845 010 9000 open 8.00 am to 8.00 pm Monday to Friday whether the number is valid. With the government VAT number checker, you will also be given details about who the VAT number is registered to.

Alternatively, you can carry out the calculation manually, although you will not be able to verify to whom the number is registered. To calculate:

1. Write down the numerical digits vertically.
2. Then multiply each of them by 8,7,6,5,4,3, then 2 respectively.
3. Add up all the numbers and subtract 97 from the total.
4. Continue to subtract 97 from the total until you reach a negative number.
5. This number will be the final two digits in the VAT number.

Thus, for a VAT number of GB 365684514, the calculation is as follows:

3 x 8 = 24
6 x 7 = 42
5 x 6 = 30
6 x 5 = 30
8 x 4 = 32
4 x 3 = 12
5 x 2 = 10
24+42+30+30+32+12+10 = 180
180 – 97 – 97 = 14

This means that the VAT number is valid – GB 3656845 14