Online VAT Calculator

We have created a simple free online VAT calculator which you can download below. It is run on excel or if you use google docs you can import it and convert.

Online VAT Calculator

It allows you to enter an amount and change the VAT rate if needed (from the default 20% VAT rate which is the current standard rate of VAT) and it will tell you how much the amount is with VAT added on top and how much it is without VAT if VAT is included already in the amount.

Our online VAT calculator is useful for example if you need to work out how much to add to the price of goods or services when it says “+ VAT” or if you have been given the cost of something including VAT you can work out how much VAT you can claim back.

Download your free online VAT calculator HERE

What is VAT?

VAT (Value Added Tax) is a tax that is levied in the United Kingdom on most business transactions involving the transfer of services or goods. It was first introduced back in 1973 and is currently managed and collected by HMRC (HM Revenue and Customs).

Once your business turnover reaches a certain level you legally have to register for VAT with HMRC and charge it on your sales. The VAT you charge to your customers / clients is called “Output VAT” and the VAT you pay on your costs is called your “Input VAT”.

If you collect more Output VAT on your sales than you pay Input VAT on your costs then the difference is paid over to HMRC on your VAT return which is usually done on a quarterly basis.

If your Input VAT is more than your Output VAT then this means you are due a refund of VAT from HMRC. This is quite typical for example in startup businesses that have not reached a certain level of sales yet.

VAT can get quite complicated if you start providing goods or services outside the UK – there are lots of different rules for both within the EC and outside the EC – HMRC have a good guide here.

The current VAT rate is 20% at March 2015 and a lower rate of 5% applies to some items including but not limited to gas and electric for domestic use and children’s car seats.

There is also a 0% (zero) rate on many items including safety equipment such as CE marked cycle helmets, children’s shoes and clothing and building services for the disabled.

And to complicate things further there are amounts which are VAT “Exempt” (which is different from 0% VAT!) such as insurance and betting.

Compulsory registration

Once your VAT taxable turnover goes over the threshold, or you know it will go over the threshold, then you need to register for VAT. The current VAT registration threshold at March 2015 is £81,000. Your VAT taxable turnover is calculated by looking at the cumulative last 12 months turnover on a rolling basis.

There are various rules about what sales are and are not included in your VAT taxable turnover which you can read on the above link.

Voluntary registration

Even if you are not near the VAT registration threshold you may decide you want to register for VAT anyway. For example if you are a startup and you want to claim VAT back on your expenses. Or another common example is if you are a freelancer or contractor and you want to make some profit by going on the Flat Rate Scheme.

Once you have registered for VAT

You can apply for VAT registration through HMRC online and once you are given your “effective date of registration” you have to make sure you charge the correct amount of VAT on your sales, keep VAT records and receipts, submit your VAT returns (again through HMRC online) and pay your VAT over to HMRC (unless you are due a rebate).

One key thing to remember is that even if your VAT registration date is, for example, 1 March 2015, you can still reclaim the VAT on certain goods and services you bought for your business before this date. Have a read of this guide from HMRC which explains this topic well but generally what you can reclaim is:

  • VAT on services for 6 months before the VAT registration date.
  • VAT on goods that you still actually have that you bought in the 4 years before your VAT registration date  – or even goods that were used to make products / other goods that you do still have.