How VAT is calculated
To add VAT, multiply the price excluding VAT by the rate. At the 20% standard rate, the VAT on £100 is £20, so the price including VAT is £120.
To remove VAT, divide the price including VAT by 1 plus the rate. At 20%, divide by 1.2: £120 ÷ 1.2 = £100, so the VAT included is £20. Taking 20% off the price including VAT is a common mistake: it gives £96 instead of £100.
Which VAT rate applies
Most goods and services are charged at the standard rate of 20%. The reduced rate of 5% applies to some goods and services, such as children's car seats and home energy. The zero rate applies to goods such as most food and children's clothes.
Zero-rated goods are still taxable for VAT, at 0%. That's different from exempt goods and services, which are outside the VAT system. Check GOV.UK for the rate that applies to a specific item.
Worked examples
Adding 5% VAT to a £60 home energy bill: £60 × 0.05 = £3 VAT, so the bill is £63 including VAT.
Removing 20% VAT from a £54 invoice total: £54 ÷ 1.2 = £45 excluding VAT, so the invoice includes £9 VAT.
Inputs for the VAT calculator
Add or remove VAT
Choose 'Add VAT' if your price doesn't include VAT yet, or 'Remove VAT' if it already does.
Amount
The price in pounds. Use the price excluding VAT when adding VAT, and the price including VAT when removing it.
VAT rate
The standard rate of 20% applies to most goods and services. Choose 5% or 0% for goods and services charged at the reduced or zero rate.
CALCULATOR QUESTIONS
VAT calculator questions
How do I work out VAT at 20%?
Multiply the price excluding VAT by 0.2 to get the VAT, or by 1.2 to get the price including VAT. For example, £250 × 1.2 = £300.
How do I remove VAT from a price?
Divide the price including VAT by 1.2 for the 20% rate, or by 1.05 for the 5% rate. The difference between the two prices is the VAT.
Why isn't removing VAT the same as taking off 20%?
VAT is 20% of the price excluding VAT, not of the price including it. Taking 20% off £120 gives £96, but the correct price excluding VAT is £100.
What's the difference between zero-rated and exempt?
Zero-rated goods and services are taxable for VAT at 0%. Exempt goods and services are outside the VAT system, so no VAT is charged on them at all.