To add 20% UK VAT to a price, multiply it by 1.2. To remove VAT from a price that already includes it, divide by 1.2. For example, £100 plus VAT is £100 × 1.2 = £120, and a £120 VAT-inclusive price contains £120 ÷ 1.2 = £100 before VAT, so the VAT is £20. To find just the VAT in a gross price, divide by 6 (because 20% VAT is one-sixth of the total). Don’t remove VAT by multiplying by 0.8; that gives £96 instead of £100.
This guide covers every common VAT question with worked examples: adding and removing VAT, the 5% reduced rate, Excel and Google Sheets formulas, rounding, and how the VAT registration threshold works. If you’d rather not do the maths, my free UK VAT calculator adds or removes VAT at 20%, 5% or 0% instantly. I tested every example below with a short Python script so the pennies are right.
According to GOV.UK’s VAT rates page, there are three VAT rates:
The standard rate has been 20% since 4 January 2011, when it rose from 17.5%. Some things are exempt from VAT altogether, such as postage stamps and financial and property transactions. Exempt isn’t quite the same as zero-rated: zero-rated sales are still taxable (at 0%) and count towards a business’s VAT turnover, while exempt sales are outside the system.
Before calculating anything, check which kind of price you have:
Getting this wrong is the most common VAT mistake. If a supplier quotes “£500 + VAT”, you’ll actually pay £600.
Formula: gross price = net price × 1.2
Why 1.2? You’re keeping 100% of the price and adding 20% on top: 100% + 20% = 120% = 1.2.
Worked examples:
If you only want the VAT itself, multiply the net price by 0.2 (or divide by 5):
Then add it to the net price for the total.
Formula: net price = gross price ÷ 1.2
This is called a reverse VAT calculation or “working out VAT backwards”. Divide the VAT-inclusive price by 1.2 to get the price before VAT, then subtract to find the VAT.
Worked examples:
When the price includes 20% VAT, the VAT is exactly one-sixth of the total. That’s because the total is 120 parts, of which 20 are VAT, and 20 ÷ 120 = 1/6.
This is the quickest way to check the VAT on a receipt in your head.
It seems logical: VAT is 20%, so take off 20%. But the 20% was added to the net price, not the gross one. Taking 20% off the bigger gross number removes too much:
The difference is £4 on a £120 item, and it grows with the price. On a £6,000 invoice, the wrong method gives £4,800 instead of the correct £5,000, a £200 error. Always divide by 1.2.
The reduced rate works the same way, with 1.05 instead of 1.2:
Home energy bills are a common place to see 5% VAT.
You don’t need a spreadsheet:
Many basic calculators also have a % key, but it behaves differently between brands. Typing “85 + 20 %” gives 102 on some and 17 on others, so the × 1.2 method is safer.
Suppose a web designer invoices a client for three items, all at the standard rate:
Net total: £1,310.99. VAT at 20%: £1,310.99 × 0.2 = £262.198, which rounds to £262.20. Invoice total: £1,573.19.
If you work out VAT per line instead, you get £240.00 + £19.20 + £3.00 (from £2.998) = £262.20, the same here, but with many lines the two methods can differ by a penny. HMRC’s rules (below) let you choose, as long as you’re consistent.
VAT is charged on the price after any discount. If a £200 + VAT item has 10% off:
Doing it the other way round gives the same answer (£240 × 0.9 = £216), because both are just multiplications. What you mustn’t do is add VAT to the original price and then subtract a fixed-pound discount, because VAT should be on the discounted amount.
For any VAT rate r (as a percentage):
Plug in r = 20 and you get 1.2 and one-sixth; plug in r = 5 and you get 1.05 and 5/105 = 1/21.
Assume the price is in cell A2.
=A2*1.2=A2*0.2=A2/1.2=A2/6 or =A2-A2/1.2ROUND, for example =ROUND(A2/1.2, 2)For a reusable sheet, put the rate in a cell (say B1 = 20%) and use =A2*(1+$B$1) to add and =A2/(1+$B$1) to remove. The $ signs lock the reference so you can fill the formula down a column.
If you’re building a shop, invoice tool or calculator, avoid floating-point surprises by using decimal arithmetic. This is the Python I used to check the examples in this post:
from decimal import Decimal, ROUND_HALF_UP
P = lambda x: Decimal(x).quantize(Decimal("0.01"), rounding=ROUND_HALF_UP)
def add_vat(net, rate=20):
net = Decimal(str(net))
vat = P(net * rate / 100)
return P(net), vat, P(net) + vat
def remove_vat(gross, rate=20):
g = Decimal(str(gross))
net = P(g * 100 / (100 + rate))
return net, P(g - net), P(g)
print(add_vat(49.99))
print(remove_vat(59.99))
print(remove_vat(105, 5))
(Decimal('49.99'), Decimal('10.00'), Decimal('59.99'))
(Decimal('49.99'), Decimal('10.00'), Decimal('59.99'))
(Decimal('100.00'), Decimal('5.00'), Decimal('105.00'))
Dividing by 100 + rate and multiplying by 100 is the same as dividing by 1.2, written so it works for any rate. For displaying the results as pounds in a web page, my guide to formatting a number as currency in JavaScript shows how to get “£1,250.00” with Intl.NumberFormat.
VAT often produces fractions of a penny. HMRC’s VAT guide (Notice 700, section 17.5) lets invoice traders work out VAT per line either:
Whatever you choose, you must be consistent, and the final total VAT on an invoice may be rounded down to the nearest whole penny. The guide also says the round-down concession is generally not appropriate for retailers, who have separate rules. For everyday calculations, rounding to the nearest penny, as in the examples above, is what most people need.
GOV.UK’s guide to rates of VAT on different goods and services lists hundreds of items. A few that surprise people:
GOV.UK’s page also notes a temporary reduced rate for certain children’s meals, tickets and family attractions from 25 June 2026 to 1 September 2026, which shows that rates can change for specific items. Check the page for anything you’re unsure about.
Only VAT-registered businesses charge VAT. According to GOV.UK’s VAT registration guide, you must register if:
You can also register voluntarily below the threshold. You don’t have to register if you only sell VAT-exempt or “out of scope” goods and services. If a small business or sole trader isn’t VAT-registered, it can’t charge VAT, so its prices shouldn’t include any.
A VAT-registered business deals with VAT in two directions:
On its VAT return, it usually pays HMRC the difference: output VAT minus input VAT. If it paid more VAT than it charged, it can usually reclaim the difference. That’s why business buyers care about VAT-exclusive prices: they can often reclaim the VAT, so the real cost to them is the net price.
VAT is a tax on spending, not on income, so it doesn’t affect your payslip directly. Income-based calculations such as tax and student loan repayments use different rules entirely; if that’s what you’re working out, see my guide to how UK student loan repayments are calculated.
For quick answers without formulas, the UK VAT calculator I built works in your browser: enter an amount, choose whether to add or remove VAT, pick 20%, 5% or 0%, and it shows the net, VAT and gross amounts. It’s part of a small set of free UK calculators I maintain, alongside tools for stamp duty, mortgages, student loans and car tax.
Multiply the price by 1.2. For example, £250 × 1.2 = £300, so the VAT is £50. To get just the VAT amount, multiply the net price by 0.2.
Divide the VAT-inclusive price by 1.2 for 20% VAT. For example, £300 ÷ 1.2 = £250 before VAT. For 5% VAT, divide by 1.05.
For 20% VAT, divide the total by 6. A £60 receipt contains £10 VAT. For 5% VAT, divide the total by 21.
Because VAT was added as 20% of the smaller net price. Taking 20% off the gross price removes too much: £120 × 0.8 is £96, but the correct net price is £120 ÷ 1.2 = £100.
The standard rate is 20%, the reduced rate is 5% and the zero rate is 0%, according to GOV.UK. The standard rate has been 20% since January 2011.
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or you expect it to exceed £90,000 in the next 30 days.
To add 20% VAT use =A2*1.2. To remove it use =A2/1.2. To get the VAT in a gross price use =A2/6. Wrap results in ROUND(...,2) to show pennies.
Multiply the net price by 1.05 to add 5% VAT, or divide the gross price by 1.05 to remove it. The VAT inside a 5%-inclusive price is the total divided by 21.
// note
This is a learning note from studying the web. It is one small topic, written so I can remember it. It is not a course and not a claim that I have finished the subject.
If a sentence is wrong, say so from the contact page and name this title. Drafts never appear here. Related notes, when they exist, are other published posts, and the same sample rule applies to each of them.
From 1 October 2026, VAT on household electricity in England, Scotland and Wales dropped from 5% to 0% until 31 March 2027. Here is who qualifies, why gas still has VAT, what happens on fixed and prepayment tariffs, and how to check the saving on your own bill.
Stamp duty is charged in slices, like income tax. How SDLT is calculated in England and Northern Ireland in 2026: the 0–12% bands, first-time buyer relief, the 5% second-home surcharge, the 2% non-resident surcharge, worked examples from £200,000 to £2 million and a free calculator.
Google released EmbeddingGemma 2, an open 740M-parameter model that puts text, code, images, video and audio into one vector space. Here is how to run it in Python on a normal CPU, load just the 270M text part, use the right prompts, shrink vectors to 256 dimensions and fix the install errors I hit.
A new GhostAction wave is using hijacked maintainer accounts to commit a fake "Security Audit" workflow that steals Actions secrets and every credential in your git history. Here is how the attack works, how to check your repositories (with a tested script), and what to rotate.