Adding and removing VAT
Adding VAT and removing it are not the same arithmetic. Removing 20% VAT means dividing by 1.2, not taking 20% off the gross price.
Figures stated for the 2026/27 UK tax year. Content last checked against official sources on .
What this calculator does
- Adds VAT to a net figure, or extracts the VAT already contained in a gross figure.
- Supports the standard 20%, reduced 5% and zero rates, or any rate you enter.
- Shows the net, the VAT and the gross so the three can be checked against an invoice.
How the calculation works
VAT is charged as a percentage of the net price, which means the direction of the calculation changes the arithmetic. Going up from a net figure is straightforward multiplication: the VAT is the net amount times the rate, and the gross is the net plus that VAT. Coming down from a gross figure is where the common mistake happens. The gross already represents 120% of the net at the standard rate, so recovering the net means dividing the gross by 1.2 — not subtracting 20% of the gross. Taking 20% off a £120 gross gives £96, when the correct net is £100. The difference grows with the value of the invoice, which is why this is a routine source of bookkeeping error. The calculator applies whichever direction you select, so the net, VAT and gross it returns are always internally consistent.
The rule
Adding VAT: VAT = net × rate, gross = net × (1 + rate). Extracting VAT: net = gross ÷ (1 + rate), VAT = gross − net.
Step by step
- Take the amount you entered and the rate you selected.
- If adding, multiply the net by the rate to get the VAT, then add it on.
- If extracting, divide the gross by one plus the rate to recover the net, then subtract to get the VAT.
Worked example
A supplier quotes £250 excluding VAT at the standard rate and the invoice needs to show all three figures.
What was entered
| Amount | £250 |
|---|---|
| Calculation direction | Add VAT |
| VAT rate | 20% |
The arithmetic
- The net amount is £250.
- VAT at the standard 20% rate is £250 × 0.20 = £50.
- The gross invoice total is £250 + £50 = £300.
- Checking in reverse: £300 ÷ 1.2 returns £250, which confirms the figures are consistent. Taking 20% off £300 would have given £240 — the classic error.
What the calculator returns
| Net amount | £250.00 |
|---|---|
| VAT | £50.00 |
| Gross amount | £300.00 |
Key assumptions
- A single VAT rate applies to the whole amount entered.
- The rate you select is the correct rate for the goods or services in question.
Limitations
- The calculator does not decide which rate applies — that depends on what is being supplied, and the classifications are detailed.
- Zero-rated and exempt supplies are not the same thing: zero-rated supplies are taxable at 0% and count towards the registration threshold, exempt supplies do not.
- VAT registration thresholds, the flat rate scheme, partial exemption and the reverse charge are not modelled.
- Rounding conventions on multi-line invoices can produce small differences from a single-line calculation.
Common questions
Why can I not just take 20% off the gross price?
What is the difference between zero-rated and exempt?
Which rate should I use?
Related calculators
- Markup Calculator — Work through business margins once VAT has been separated out.
- Corporation Tax Calculator — Corporation Tax is charged on profit after VAT has been accounted for.
Official sources
Every figure in this guide was checked against the sources below. Where a source could not confirm a figure, it is marked as requiring verification rather than presented as settled.
- VAT rates — GOV.UKStandard rate 20%, reduced rate 5%, zero rate 0%
- VAT rates on different goods and services — GOV.UKWhich rate applies to which supply