Add VAT to a price, or remove it to find the price before VAT. The standard UK rate is 20%; some goods and services are charged at the reduced 5% rate or the zero rate.
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How to use it
- Choose Add VAT if your amount excludes VAT, or Remove VAT if it already includes it.
- Enter the amount and choose the rate.
The formulas
- Adding VAT at 20%: gross = net × 1.2
- Removing VAT at 20%: net = gross ÷ 1.2, so VAT = gross ÷ 6
- At 5%: gross = net × 1.05; net = gross ÷ 1.05
A common mistake is to remove VAT by taking 20% off the gross price. On £120, 20% off gives £96, but the correct net price is £120 ÷ 1.2 = £100.
Worked examples
| Situation | Net | VAT | Gross |
|---|---|---|---|
| Invoice for £850 of work at 20% | £850.00 | £170.00 | £1,020.00 |
| Receipt showing £59.99 including 20% VAT | £49.99 | £10.00 | £59.99 |
| Domestic energy bill of £126 at 5% | £120.00 | £6.00 | £126.00 |
Which rate applies?
- 20% standard: most goods and services.
- 5% reduced: for example domestic fuel and power, children’s car seats, some energy-saving installations.
- 0% zero: for example most food, children’s clothes, books and newspapers.
Rules have exceptions, so check HMRC’s guidance for specific items.
Frequently asked questions
How do I work out VAT from a total?
Divide the total by 6 to get the VAT at 20%, or divide by 1.2 to get the price before VAT.
What is the UK VAT threshold?
Businesses must register for VAT when taxable turnover goes over £90,000 in a rolling 12 months.
Is VAT charged on everything?
No. Some items are zero-rated or exempt. Zero-rated items are taxable at 0%; exempt items are outside VAT altogether.
Sources
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