VAT profit calculator: the same sale, registered vs not

VAT is the most commonly botched part of seller maths, because it cuts both ways: output VAT on what you charge, input VAT you may reclaim on what you buy. The honest way to see its effect is the identical sale computed both ways.

Published 29 July 2026 · Rates last checked 18 August 2026 · Worked examples computed by the live calculation engine

The problem

Sellers either forget VAT entirely (margins look 20% better than they are) or subtract it from everything (margins look worse than they are). Both errors come from mixing VAT-inclusive and VAT-exclusive numbers in one sum. The rule: profit is ex-VAT revenue minus ex-VAT costs; VAT itself is cashflow you hold, not money you earned or lost — unless you can't reclaim it.

The same sale, both ways

An eBay UK item at £41.99, cost £18.00 from a UK supplier, £3.35 postage, default category, business seller:

VAT-registered

£12.26

35.0% margin. Collects £7.00 output VAT for HMRC, reclaims input VAT on stock, postage and fees; net VAT bill £2.53.

Not registered

£14.80

35.2% margin. No VAT charged on the sale, but VAT on the supplier invoice, postage and platform fees is an unrecoverable real cost.

Identical sale, £2.53 difference in take-home — purely from VAT treatment. Neither number is available from "price minus cost".

The formula

registered: profit = revenue/1.2 − cost(ex VAT) − postage(ex VAT) − fees not registered: profit = revenue − cost(inc VAT) − postage(inc VAT) − fees × 1.2
For non-registered sellers, replace every 'ex VAT' with 'as paid' — and add the VAT on platform fees as a cost.

Assumptions in this example

  • Domestic UK sale at 20% VAT; supplier charges UK VAT (reclaimable only if registered).
  • eBay default category final value fee, per-order and regulatory fees from the verified UK card.
  • Flat-rate scheme users: your maths differs — treat these figures as the standard-scheme baseline.

Frequently asked

Does VAT come out of my profit?
Not if you're registered and price correctly: the VAT you collect belongs to HMRC and was never yours, and the VAT you pay on costs comes back as input VAT. Profit should always be calculated ex-VAT on both sides. It only becomes a cost when you can't reclaim it.
Am I better off not being VAT-registered?
It depends on your buyers and your inputs. Non-registered sellers keep the full sale price (no output VAT) but can't reclaim VAT on stock, postage or platform fees. On the identical sale above, the non-registered seller keeps more — but that flips as your input costs grow, and registration is compulsory past the threshold.
Do I pay VAT on eBay and Shopify fees?
Platforms charge VAT on their fees. Registered sellers reclaim it, so it's neutral. Non-registered sellers can't — so the real cost of a '10%' fee is 12% with VAT on top. Munavo prices that in automatically.
What about selling to customers outside the UK?
Exports are typically zero-rated — no output VAT on the sale, and the calculator shows a £0.00 VAT line rather than silently pretending the sale was domestic.

Every rate used on this page is public: see the Rate Centre for the exact cards and verification dates, and how we keep the numbers honest.

Run your own numbers

Free, no account needed — the same engine as every example above.

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