The short answer
To add 20% VAT: multiply the price by 1.2. £100 becomes £120.
To remove 20% VAT: divide by 1.2 — don't take off 20%. £120 including VAT is £100 before VAT. Taking 20% off £120 gives £96, which is the most common VAT mistake there is.
Adding VAT is easy. Taking it back out of a total is where people slip, because the VAT was calculated on the smaller pre-VAT price, not on the total you're looking at. Once that clicks, every VAT, GST and sales tax calculation works the same way.
On this page
Adding VAT to a price
Multiply by 1 plus the rate as a decimal:
| Rate | Multiply by | £100 becomes |
|---|---|---|
| 20% (UK standard) | 1.20 | £120.00 |
| 5% (UK reduced) | 1.05 | £105.00 |
| 0% (zero-rated) | 1.00 | £100.00 |
Removing VAT from a total
- 1Take the price including VAT: £249.99.
- 2Divide by 1.2: £249.99 ÷ 1.2 = £208.33. That's the price before VAT.
- 3The VAT is the difference: £249.99 − £208.33 = £41.66.
A shortcut for the VAT part alone: at 20%, VAT is one sixth of a VAT-inclusive price (£249.99 ÷ 6 = £41.66). At 5%, it's one twenty-first.
UK VAT rates
| Rate | Applies to (examples) |
|---|---|
| 20% standard | Most goods and services |
| 5% reduced | Domestic energy, children's car seats, some mobility aids |
| 0% zero rate | Most food, books and newspapers, children's clothes, passenger transport |
| Exempt | Things outside the VAT system, such as many financial and insurance services |
Zero-rated vs exempt
Both mean no VAT on the price, but they're different for businesses: zero-rated sales still count towards the VAT threshold and let you reclaim VAT on costs, while exempt sales generally don't.Businesses must register for VAT once their taxable turnover passes £90,000 in any rolling 12 months — not per tax year.
GST, HST and sales tax elsewhere
The method is identical; only the rate changes.
- Australia: GST is 10%. Remove it by dividing by 1.1, or take one eleventh of the total.
- New Zealand: GST is 15% — divide by 1.15.
- Canada: 5% GST everywhere, combined into a single HST of 13% in Ontario, 14% in Nova Scotia and 15% in New Brunswick, Newfoundland and Labrador and PEI. BC, Manitoba, Saskatchewan and Quebec add their own provincial tax on top of GST.
- United States: no VAT — instead, state and local sales taxes that vary by address and are usually added at the till, not included in shelf prices.
Invoices and pricing tips for small businesses
- When quoting business customers, state prices “ex VAT” or “+ VAT” so nobody is surprised.
- Consumer prices in the UK must normally be shown including VAT.
- Round once, at the end — rounding each line of a long invoice separately can leave totals a penny or two out.
- Working out your selling price? Set the margin on the price before VAT — see margin vs markup.
Frequently asked questions
How do I remove VAT from a price?
Divide the VAT-inclusive price by 1.2 (for 20% VAT). £120 ÷ 1.2 = £100. Don't subtract 20% — that gives the wrong answer.
What is 20% VAT of £100?
£20, making a total of £120.
How much is VAT in the UK?
The standard rate is 20%. There's a 5% reduced rate and a 0% zero rate for certain goods and services.
How do I calculate GST in Australia?
Add GST by multiplying by 1.1. Remove it by dividing by 1.1 — the GST part is one eleventh of a GST-inclusive price.
When do I need to register for VAT?
In the UK, when your taxable turnover goes over £90,000 in any 12-month period. You can register voluntarily below that.
OnlineToolPro Editorial Team
Builds and tests the tools on this site
The team behind OnlineToolPro. We write guides from building and testing these tools, and check platform rules against official documentation such as YouTube Help. When something changes, we update the article and its date.