This reverse VAT calculator allows you to remove VAT from a total price and extract both the net value and VAT amount. It is essential for ecommerce sellers, accountants, and business owners working with VAT-inclusive pricing.
A common mistake is subtracting VAT directly from the total price. This produces incorrect results because VAT is calculated as a percentage of the net value, not the gross amount. The correct method requires reversing the VAT using division.
This tool ensures accurate VAT breakdowns so you can analyse revenue, validate invoices, and protect your margins.
The calculator separates a VAT-inclusive price into two parts: the net value (your actual revenue) and the VAT amount (the tax included in the total).
This distinction is critical. If you treat the gross amount as revenue, you will overestimate your earnings and miscalculate your profit.
Net = Gross ÷ (1 + rate ÷ 100)
VAT = Gross − Net
This method correctly reverses VAT because the tax is applied to the net value first before being added to the total.
Reverse VAT is essential when analysing real business performance. For example, if you receive £120 from a sale, your actual revenue is only £100 at 20% VAT. The remaining £20 must be paid to HMRC.
If you calculate profit based on the full £120, your margin will appear higher than it actually is. This can lead to poor pricing decisions and unprofitable campaigns.
Using this calculator ensures your financial decisions are based on accurate net revenue, not misleading gross figures.
Example 1:
£120 total → £100 net + £20 VAT
Example 2:
£105 total at 5% → £100 net + £5 VAT
Example 3:
Incorrect method: subtracting VAT directly leads to wrong results.
Divide by (1 + VAT rate), then subtract to get VAT.
Because VAT is based on the net amount, not the total.
No, VAT is collected on behalf of HMRC.