How VAT is calculated
Adding VAT: multiply the net price by 1.20 (for 20%). £100 net becomes £120 gross, of which £20 is VAT.
Removing VAT: divide the gross price by 1.20. A common mistake is to take 20% off the gross figure – that gives the wrong answer. £120 ÷ 1.2 = £100 net, so the VAT is £20, not £24.
UK VAT rates
The UK has three VAT rates: the standard rate of 20%, a reduced rate of 5% (for example domestic energy and child car seats) and a zero rate of 0% (for example most food and children's clothing). Some goods and services are exempt or outside the scope of VAT. Check GOV.UK for which rate applies to a specific item.
FAQs
What is 20% VAT on £100?
£20, making a gross total of £120.
How do I work out VAT from a total that includes VAT?
Divide the total by 1.2 to get the net price, then subtract that from the total. The difference is the VAT.
Is VAT 1/6 of the gross price?
At 20%, yes – the VAT portion of a VAT-inclusive price is exactly one sixth of it.