The two formulas
- Adding VAT: gross = net × (1 + rate). At 20%, £100 net is £120 gross.
- Removing VAT: net = gross ÷ (1 + rate). At 20%, £120 gross is £100 net.
The classic mistake is taking 20% off a gross price: £120 minus 20% is £96, not £100. To remove VAT you divide, you don't subtract. At 20%, the VAT inside a gross price is one sixth of it.
UK rates
In the UK the standard rate is 20%, the reduced rate 5% (for example domestic energy and children's car seats) and the zero rate 0% (most food, books, children's clothes). HMRC's guidance lists which goods and services go in each band. Across the EU, standard rates run from 17% in Luxembourg to 27% in Hungary.
The US has no VAT: states and local governments set sales tax instead, added at the till.
On your invoices
A VAT invoice shows the net amount, the rate, the VAT amount and the total for each rate used. See what must be on an invoice, or build one with the free invoice generator.
About this calculator
Results are rounded to the cent for display. On a real invoice, follow your tax authority's rounding rules. Nothing you type leaves your browser.
Frequently asked questions
How do I calculate VAT backwards from a gross price?
Divide the gross price by 1 plus the rate: at 20%, divide by 1.2. The difference between the gross and the result is the VAT.
Why isn't 20% off the gross price the same as removing VAT?
Because VAT is 20% of the net price, not of the gross. Removing it means dividing by 1.2, which takes off one sixth (16.67%) of the gross price.
Does this work for other rates?
Yes: enter any rate, including your own country's, or use the buttons for 20%, 5% and 0%.