How to Calculate VAT by Hand

The two formulas you need

Everything on this page comes down to two formulas. To add VAT to a net (VAT-exclusive) price: multiply by 1 + (rate ÷ 100). To remove VAT from a gross (VAT-inclusive) price: divide by 1 + (rate ÷ 100). At the UK's standard 20% rate, that means multiplying by 1.20 to add VAT, and dividing by 1.20 to remove it. Keep these two numbers, 1.20 to multiply, 1.20 to divide, in mind and the rest of this guide is just worked examples of applying them.

How to add VAT to a price, step by step

Say you have a net price of £250 and need to add the standard 20% VAT rate.

• Step 1: Take the net price. £250.
• Step 2: Add 1 to the rate expressed as a decimal (20% becomes 0.20, so 1 + 0.20 = 1.20).
• Step 3: Multiply the net price by that number. £250 × 1.20 = £300.
• Step 4: That's your gross (VAT-inclusive) price: £300. The VAT amount itself is the difference, £300 - £250 = £50.

How to remove VAT from a price, step by step

Say you have a gross price of £300 (VAT already included, at the standard 20% rate) and need to find the underlying net price.

• Step 1: Take the gross price. £300.
• Step 2: Add 1 to the rate expressed as a decimal, exactly as before (1 + 0.20 = 1.20).
• Step 3: Divide the gross price by that number, not multiply. £300 ÷ 1.20 = £250.
• Step 4: That's your net (VAT-exclusive) price: £250. The VAT amount is again the difference, £300 - £250 = £50.

The most common mistake: subtracting the percentage directly

The single most common VAT calculation error is trying to remove VAT by simply subtracting 20% of the gross price, rather than dividing by 1.20. Using the £300 example above: 20% of £300 is £60, so subtracting gives £240. But the correct net price is £250, not £240. The error happens because 20% of the gross price is a bigger number than the VAT that was actually added to the net price in the first place, they're percentages of two different starting figures. Always divide the gross price by 1 + (rate ÷ 100) to remove VAT correctly; never subtract the rate as a straight percentage of the total.

Worked examples at each UK VAT rate

The same two formulas apply at every UK VAT rate, only the multiplier changes.

See the UK VAT rates reference page for the full list of which goods and services fall into each rate category, including the zero-rated and exempt items this page does not cover in detail.

• Standard rate (20%): multiply by 1.20 to add VAT, divide by 1.20 to remove it. A £80 net price becomes £96 gross; a £96 gross price has a £80 net price underneath it.
• Reduced rate (5%): multiply by 1.05 to add VAT, divide by 1.05 to remove it. A £200 net price (e.g. a domestic energy bill) becomes £210 gross; a £210 gross price has a £200 net price underneath it.
• Zero rate (0%): multiply or divide by 1.00, meaning the net and gross prices are identical, no VAT is added at all.

A quicker way: use the calculator instead

Once you understand the method above, the VAT calculator on this site does exactly the same two calculations for you instantly, including for the reduced 5% rate, the zero 0% rate, or any custom rate you type in, and it also shows the net, VAT and gross figures together so you don't have to work out the third number by subtraction yourself. It's especially useful when you need to check several prices quickly rather than working through the formula by hand each time.

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