How to calculate VAT
To add VAT at the standard 20% rate, multiply the net price by 1.20. So £100 net becomes £120 gross, with £20 of VAT. For the 5% reduced rate, multiply by 1.05 instead. The general rule is gross = net × (1 + rate), whatever the rate.
Reverse VAT: work out the VAT in a total
When a price already includes VAT, divide the total by 1.2 to get the net figure, then subtract to find the VAT. There is a quick shortcut at 20%: the VAT inside any gross total is the total divided by 6. So a £120 gross price contains £20 of VAT and £100 net. Switch the calculator to Remove VATand it does this for you at any rate.
Common net prices at 20% VAT
| Net price | VAT (20%) | Gross total |
|---|---|---|
| £10 | £2.00 | £12.00 |
| £50 | £10.00 | £60.00 |
| £100 | £20.00 | £120.00 |
| £500 | £100.00 | £600.00 |
| £1,000 | £200.00 | £1,200.00 |
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Simon is the founder of Orbit Money, a tool that helps people track subscriptions and recurring spend. He builds Orbit's free money calculators and writes about personal finance for UK and Australian readers.
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