VAT, GST, and Sales Tax calculation confuses many freelancers and business owners. This guide explains exactly how to add or remove tax from any price — and shows you how to do it in seconds with the free ToolsLoop VAT calculator.
Formula: Gross = Net × (1 + Rate/100)
Example: AED 1,000 service + 5% UAE VAT = AED 1,000 × 1.05 = AED 1,050 (VAT = AED 50)
Formula: Net = Gross ÷ (1 + Rate/100)
Example: £120 price including 20% UK VAT → Net = £120 ÷ 1.20 = £100 (VAT = £20)
You must charge VAT once your annual revenue exceeds your country's registration threshold: UK £90,000/year; UAE AED 375,000; Australia AUD 75,000. If registered, include your VAT/GST number on every invoice — the ToolsLoop Invoice Generator has a dedicated field for this.
The UAE standard VAT rate is 5%, introduced in January 2018. Use the 5% preset in the ToolsLoop VAT calculator.
The standard UK VAT rate is 20%. A reduced rate of 5% applies to certain goods and services.
Divide the gross (VAT-inclusive) price by (1 + rate/100). For 20% VAT: Net = Gross ÷ 1.20. The ToolsLoop VAT Calculator does this automatically.
Yes. Enter any custom rate into the ToolsLoop VAT Calculator — useful for US Sales Tax, India GST, or any other custom rate.
Understanding VAT is essential for every business owner and freelancer, especially if you work with international clients or operate across multiple countries. The key points to remember: always separate the net amount from the gross amount on your invoices; display the VAT registration number clearly; apply the correct rate for the country of supply; and keep accurate records of all VAT charged and paid so you can file accurate returns and reclaim input VAT on your expenses.
The ToolsLoop VAT Calculator makes this process instant and error-free. The Invoice Generator automatically calculates and displays VAT on every line item. Both tools are completely free and require no signup.
Once you are VAT-registered, you must file regular VAT returns — typically quarterly in the UK (HMRC), quarterly in the UAE (FTA), and monthly or quarterly in Australia (ATO). Your return shows the total VAT you collected from customers (output tax) minus the total VAT you paid on business expenses (input tax). The difference is what you pay to the government, or in some cases claim back as a refund. The ToolsLoop Expense Tracker helps you keep an organised record of your business expenses and the VAT you paid on them, making VAT return preparation much simpler.