Adding VAT and removing VAT aren't the same sum
To add VAT, multiply the net price by the rate. At 20%, £100 net has £20 VAT, so the gross is £120.
To remove VAT, you can't just take 20% off. 20% of £120 is £24, which would leave £96, not £100. That's because the VAT is 20% of the net price, not of the gross. Instead, use the VAT fraction:
| VAT rate | VAT fraction | Or divide the gross by |
|---|---|---|
| 20% | 1/6 | 1.2 to get the net |
| 5% | 1/21 | 1.05 to get the net |
So £120 × 1/6 = £20 VAT, leaving £100 net. For any rate, the fraction is rate ÷ (100 + rate). At 17.5% that's 17.5/117.5, or 7/47.
Rounding
This calculator works in whole pence and rounds the VAT to the nearest penny, with half a penny rounded up. When it removes VAT, the net is what's left after the rounded VAT, so net plus VAT always equals the gross you typed. For example, £100.00 including 20% VAT is £83.33 net and £16.67 VAT. HMRC's rounding rules are in the VAT guide (Notice 700). They also let you round the VAT total on an invoice down to a whole penny. Whichever you choose, do it the same way every time.
Which rate applies?
Most goods and services are at the standard rate of 20%. Some, like home energy, are at the reduced rate of 5%. Some, like most food and children's clothes, are zero-rated. Rates can change, so check VAT rates on different goods and services on GOV.UK.
This calculator is for general information. It isn't tax advice.