VAT Included / Excluded UK 2026 — Convert Inc. & Ex. VAT Prices

Instantly convert between VAT-inclusive (inc. VAT) and VAT-exclusive (ex. VAT) UK prices. Switch direction with one click.

✓ Inc. → Ex. VAT✓ Ex. → Inc. VAT✓ All UK Rates

Standard rate (20%)

Pre-VAT price
£83.33
Total (with VAT)£100.00
🇬🇧 VAT rate20.00%
VAT amount£16.67
£83.33 + £16.67 = £100.00 ✓
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Quick VAT Conversion Reference

DirectionAt 20%At 5%At 0%
Ex. → Inc. VAT× 1.20× 1.05× 1.00
Inc. → Ex. VAT÷ 1.20÷ 1.05÷ 1.00
VAT fraction÷ 6÷ 21£0
B2B example. A supplier quotes £2,000 ex. VAT. The inc. VAT price is £2,000 × 1.20 = £2,400. The VAT element (£400) is reclaimable on your VAT return.
B2C example. A product is priced at £59.99 inc. VAT. The ex. VAT price is £59.99 ÷ 1.20 = £49.99 (net) + £10.00 VAT.

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For informational purposes only. Tax rates change frequently — verify with your state's Department of Revenue before filing. This tool is not a substitute for professional tax advice.

· Rate source metadata is tracked in the TaxesLedger tax data registry.

M. Imtinan Farooq — Data Engineer focused on financial data systems

Data methodology reviewed by M. Imtinan Farooq — Data Engineer focused on financial data systems.

Imtinan specializes in financial data systems and multi-state US sales tax modeling. With hands-on experience building data pipelines that attach source metadata, confidence labels, and verification status to tax records, he helps keep TaxesLedger rates auditable and easier to refresh. This is an educational calculator, not tax, accounting, or legal advice. LinkedIn

Data Sources: State DORs · Canada Revenue Agency · EU VAT authorities · Tax Foundation references

Understanding VAT-Inclusive and VAT-Exclusive Pricing

Understanding inc. VAT vs ex. VAT pricing in the UK

In the UK, 'inc. VAT' (VAT-inclusive) and 'ex. VAT' (VAT-exclusive) are the two fundamental ways to express prices. Consumer-facing prices must always be shown inc. VAT under the Price Marking Order 2004. B2B pricing typically shows ex. VAT amounts, with the VAT added as a separate line on invoices. Understanding both figures is essential for accurate budgeting, cost comparison, and financial reporting. The difference isn't just academic — getting it wrong inflates apparent costs by 20% or understates them accordingly.

When you need to convert between inc. and ex. VAT

Converting between VAT-inclusive and VAT-exclusive prices is a daily task for UK businesses. Procurement teams compare supplier quotes (often ex. VAT) with retail alternatives (inc. VAT). Accountants post the net (ex. VAT) amount to expenses and the VAT amount to the input tax account. Retailers set shelf prices (inc. VAT) from wholesale costs (ex. VAT). Freelancers and contractors invoice clients with the net fee plus VAT. E-commerce platforms must display inc. VAT to consumers while tracking ex. VAT revenue internally.

VAT and your profit margins

A critical mistake many new business owners make is calculating margins on VAT-inclusive figures. Since VAT is collected on behalf of HMRC and remitted quarterly, it's not revenue — it's a pass-through. Your actual gross margin is: (Net selling price – Net cost) ÷ Net selling price × 100. For example, if you buy something for £80 + VAT (£96 inc.) and sell it for £150 + VAT (£180 inc.), your margin is (£150 – £80) ÷ £150 = 46.7%, not (£180 – £96) ÷ £180 = 46.7%. In this case the numbers happen to align, but the principle matters for complex scenarios with mixed rates.

What Does ex VAT Mean?

In the UK, "ex VAT" stands for excluding Value Added Tax. It represents the net price of a product or service before any VAT has been added. When you purchase goods or services listed as ex VAT, the actual amount you pay at the checkout will be higher once the tax is applied. Ex VAT pricing is the standard convention in business-to-business (B2B) transactions because VAT-registered companies can generally reclaim the tax paid on their business expenses, making the pre-tax price their true net cost. To calculate the final cost including tax, businesses use our standard UK VAT calculator, or they back out the tax from an inclusive total using a VAT reverse calculator.

ex VAT vs inc VAT

The distinction between ex VAT vs inc VAT pricing is fundamental to commerce in the UK. "Inc VAT" (inclusive) means the displayed price already includes the Value Added Tax—typically at the standard 20% rate—which is the legal requirement for all consumer-facing retail (B2C) sales. Conversely, "ex VAT" (exclusive) displays the base price before tax, which is the standard format for business-to-business (B2B) transactions. Knowing both values is crucial for pricing transparency and financial planning. While consumers only need to focus on the inc VAT price to understand their final out-of-pocket cost, VAT-registered businesses need both figures to correctly record their net expenditures and reclaim the 20% tax portion from HMRC. This guide is purely informational and does not constitute formal legal or tax filing advice, so businesses should consult official guidelines.

Frequently asked questions

Quick answers to the most common questions users ask.

What does 'inc. VAT' and 'ex. VAT' mean in the UK?

'Inc. VAT' (including VAT) is the gross price with VAT already added — what consumers pay at the till. 'Ex. VAT' (excluding VAT) is the net price before VAT — what businesses typically quote to other businesses. UK law requires B2C prices to be shown inc. VAT.

How do I convert an ex. VAT price to inc. VAT?

Multiply the ex. VAT price by 1.20 (for the standard 20% rate). For example, £500 ex. VAT × 1.20 = £600 inc. VAT. For the 5% reduced rate, multiply by 1.05.

How do I convert an inc. VAT price to ex. VAT?

Divide the inc. VAT price by 1.20 (for the standard 20% rate). For example, £600 inc. VAT ÷ 1.20 = £500 ex. VAT. The VAT element is £600 – £500 = £100.

Why do UK B2B prices often show ex. VAT?

Because VAT-registered businesses can reclaim input VAT, the ex. VAT price represents their actual cost. Showing prices ex. VAT makes cost comparison easier for trade buyers. The VAT is then shown separately on the invoice for the buyer's VAT return.

Do online stores have to show prices inc. VAT?

Yes. Under the Consumer Rights (Payment Surcharges) Regulations and the Price Marking Order, all prices displayed to UK consumers (online or in-store) must include VAT. B2B-only platforms may show ex. VAT prices if access is restricted to verified businesses.

How does VAT affect profit margins?

VAT is not a business cost — it's collected on behalf of HMRC. Your profit margin should be calculated on the ex. VAT figures: Margin = (Ex. VAT selling price – Ex. VAT cost) ÷ Ex. VAT selling price × 100. This is why converting between inc. and ex. VAT is essential for accurate financial analysis.

More UK VAT Tools

Explore our complete suite of UK VAT calculators.

UK VAT Calculator

Add VAT to any net price at standard, reduced, or zero rates.

Reverse VAT Calculator

Reverse calculation with UK VAT fraction shortcuts and every EU rate.

Inc VAT vs Ex VAT — Meaning

What including and excluding VAT means on quotes, invoices, and price tags.

🇬🇧 HMRC Official📊 OECD

Official Sources & Citations

All rates, thresholds, and regulatory guidance cited on this page are sourced from official government publications and non-partisan research institutions.

International Tax Bodies

🇪🇺

European Commission — VAT Guide

Comprehensive portal for VAT rates and rules across all 27 EU member states, including B2B/B2C regulations.

ec.europa.eu
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OECD — Consumption Tax Database

Global comparative data on VAT/GST structures and consumption tax trends across OECD member nations.

oecd.org

Professional & Industry Organizations

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AICPA — Sales Tax Center

Professional accounting standards and resources for sales tax compliance, risk management, and audit defense.

aicpa.org
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Multistate Tax Commission (MTC)

Intergovernmental agency facilitating state tax uniformity, nexus guidelines, and model tax statutes.

mtc.gov

TaxesLedger is an independent educational tool. We are not affiliated with any government agency. Rate records include source metadata and verification status; always confirm with your jurisdiction's official Department of Revenue before filing. Last registry update: September 11, 2026.

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