How to Calculate VAT
Short answer: to add 20% VAT, multiply the net price by 1.2. To remove VAT from a price that already includes it, divide by 1.2 (the VAT part is the price divided by 6). For the 5% rate, use 1.05 instead.
The two formulas you need
Every VAT sum is one of two jobs: adding VAT to a price that excludes it (net to gross), or taking VAT out of a price that includes it (gross to net).
Remove VAT: net = gross ÷ (1 + rate)
At 20%: multiply by 1.2 to add, divide by 1.2 to remove, VAT = gross ÷ 6
At 5%: multiply by 1.05 to add, divide by 1.05 to remove, VAT = gross ÷ 21
The "divide by 6" shortcut works because at 20% the VAT is 20 parts out of a gross of 120, which is one sixth. At 5% it is 5 parts out of 105, one twenty-first.
The mistake almost everyone makes
To get the price without VAT, it is tempting to knock 20% off the gross price. That is wrong, because the 20% was added to the smaller net figure, not the gross one. Take £120: 20% off gives £96, but the real net price is £120 ÷ 1.2 = £100. On a £1,000 invoice the shortcut gives £800 when the correct net figure is £833.33, an error of £33.33.
Adding VAT: quick table
| Net price | VAT at 20% | Gross at 20% | VAT at 5% | Gross at 5% |
|---|---|---|---|---|
| £10 | £2.00 | £12.00 | £0.50 | £10.50 |
| £50 | £10.00 | £60.00 | £2.50 | £52.50 |
| £100 | £20.00 | £120.00 | £5.00 | £105.00 |
| £250 | £50.00 | £300.00 | £12.50 | £262.50 |
| £500 | £100.00 | £600.00 | £25.00 | £525.00 |
| £1,000 | £200.00 | £1,200.00 | £50.00 | £1,050.00 |
| £2,500 | £500.00 | £3,000.00 | £125.00 | £2,625.00 |
| £10,000 | £2,000.00 | £12,000.00 | £500.00 | £10,500.00 |
Removing VAT: quick table
| Price including VAT | Net (20%) | VAT part (20%) | Net (5%) | VAT part (5%) |
|---|---|---|---|---|
| £12 | £10.00 | £2.00 | £11.43 | £0.57 |
| £60 | £50.00 | £10.00 | £57.14 | £2.86 |
| £100 | £83.33 | £16.67 | £95.24 | £4.76 |
| £120 | £100.00 | £20.00 | £114.29 | £5.71 |
| £300 | £250.00 | £50.00 | £285.71 | £14.29 |
| £500 | £416.67 | £83.33 | £476.19 | £23.81 |
| £1,000 | £833.33 | £166.67 | £952.38 | £47.62 |
| £1,499 | £1,249.17 | £249.83 | £1,427.62 | £71.38 |
| £5,000 | £4,166.67 | £833.33 | £4,761.90 | £238.10 |
Worked examples
A builder's quote "plus VAT". A kitchen fitter quotes £3,450 + VAT. The VAT is £3,450 × 0.2 = £690, so you will pay £4,140. Always check whether a trade quote is net or gross: on this job the difference is £690.
Your energy bill. Household gas and electricity are charged at the 5% reduced rate. If a month's bill is £150 including VAT, the net amount is £150 ÷ 1.05 = £142.86 and the VAT is £7.14 (the same as £150 ÷ 21).
Which rate applies?
| Rate | Examples (GOV.UK) |
|---|---|
| Standard 20% | Most goods and services, including most building work, furniture, adult clothing and restaurant meals |
| Reduced 5% | Domestic electricity, gas, heating oil and solid fuel; children's car seats |
| Zero 0% | Most food, books, children's clothes and footwear; energy saving materials installed in homes (until 31 March 2027) |
Zero-rated is not the same as exempt. Both mean no VAT on your receipt, but businesses selling zero-rated goods can still reclaim VAT on their costs.
Practical tips
- Work from the net figure. Round only at the end. Rounding the VAT first and then adding can leave you a penny out on invoices.
- Ask "is that plus VAT?" Trade and business prices are often quoted net; shop prices for consumers must include VAT.
- Running a small business? You must register for VAT if your taxable turnover over the last 12 months goes over £90,000, or you expect it to go over £90,000 in the next 30 days (GOV.UK, VAT registration).
- Other percentage sums. For discounts, mark-ups and percentage change, use the percentage calculator. For the 5% VAT on your power bill, the electricity cost calculator shows what an appliance costs to run.
Sources: GOV.UK, "Rates of VAT on different goods and services" and "Register for VAT", checked 23 October 2026.
Try the vat calculator (uk)
Enter your own numbers below, or open the full vat calculator (uk) with the formula and more examples.
This guide is general information with example numbers, not financial, tax or building advice. Your costs and results will differ. Terms
Frequently asked questions
How do I work out VAT from a total?
Divide the total by 6 to get the VAT part at 20%. For £120, the VAT is £20 and the net price is £100. At 5%, divide by 21.
How do I add 20% VAT to a price?
Multiply by 1.2. £250 net becomes £300 including VAT.
Why can't I just take 20% off to remove VAT?
Because VAT was added to the net price, not the gross one. 20% off £120 gives £96, but the correct net figure is £120 ÷ 1.2 = £100.
What is the VAT on £1,000?
£200 if £1,000 is the net price (£1,200 in total). If £1,000 already includes VAT, the VAT part is £166.67 and the net price is £833.33.
What is the VAT registration threshold in 2026?
£90,000 of taxable turnover in a rolling 12 months.