How to calculate VAT in the UK
Have a price including VAT and want to know the net amount? Divide by 1 + the VAT rate: 1.20 for 20% VAT, 1.21 for 21%. Don’t simply subtract the percentage. The VAT calculator does it in one step at any rate.
The formulas
- Net price (excl. VAT) = gross price ÷ (1 + rate ÷ 100)
- VAT amount = gross price × rate ÷ (100 + rate)
Example at 20% (UK standard rate): an invoice of £120 including VAT. Net is 120 ÷ 1.20 = £100, so it contains £20 VAT.
Example at 21% (Netherlands, Belgium, Spain): €121 including VAT is 121 ÷ 1.21 = €100 net, with €21 VAT.
How to add 20% VAT
To add VAT to a net price, multiply by 1 + the rate:
gross price = net price × 1.20
Example: a service costs £250 excluding VAT. Including 20% VAT it is 250 × 1.20 = £300, of which £50 is VAT. For the UK reduced rate of 5% (for example domestic energy), multiply by 1.05.
The most common mistake
Many people subtract the VAT percentage from the gross price: £120 − 20% = £96. That is £4 too little. VAT is calculated on the net price, not on the total. The VAT share of a price including 20% VAT is therefore only 16.67% (20 ÷ 120), and at 21% it is 17.36% (21 ÷ 121).
| Gross (incl. 20% VAT) | Net | VAT |
|---|---|---|
| 50.00 | 41.67 | 8.33 |
| 100.00 | 83.33 | 16.67 |
| 250.00 | 208.33 | 41.67 |
| 1,000.00 | 833.33 | 166.67 |
Common VAT rates in Europe
Standard rates differ by country: for example 19% in Germany, 20% in France and the UK, 21% in the Netherlands, Belgium and Spain, 22% in Italy and 25% in Denmark and Sweden. Most countries also have one or more reduced rates for food, books or medicines. The VAT calculator accepts any rate.
When do you need this?
- Businesses and freelancers processing receipts: the VAT you pay can usually be reclaimed as input tax.
- Comparing prices with business price lists, which are often quoted excluding VAT.
- Calculating margins: always use net prices. The profit margin calculator helps.
US sales tax works differently
In the US, prices are shown before sales tax and the tax is added at checkout. To find the pre-tax price from a receipt total, the same formula applies: total ÷ (1 + tax rate).
Working with Dutch rates? Read Dutch VAT rates explained or use the Dutch VAT calculator.
Frequently asked questions
How do I remove 20% VAT from a price?
Divide the price by 1.20. For example, 240 including VAT is 200 excluding VAT.
How much VAT is in 100 including 21% VAT?
17.36 is VAT and 82.64 is the net amount.
Why is subtracting 20% wrong?
Because VAT is calculated on the net price. The VAT share of a gross price at 20% is 16.67%, not 20%.