Adding and removing VAT
To add 20% VAT, multiply the net price by 1.2: £100 → £120. To remove VAT from a VAT-inclusive price, divide by 1.2, not subtract 20%: £120 ÷ 1.2 = £100, and the VAT is £20. Taking 20% off £120 would wrongly give £96. For the 5% reduced rate (domestic energy, children's car seats), divide by 1.05.
Sales tax vs VAT
The UK, the EU and most countries charge VAT, which is usually included in shelf prices for consumers. The US charges state and local sales tax at the till, at rates from 0% (for example Oregon) to over 9% when local taxes are added, so enter a custom rate for US purchases.
Frequently asked questions
How do I remove 20% VAT?
Divide the gross amount by 1.2.
What is the UK VAT rate?
20% standard, 5% reduced and 0% zero rate.
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