How to calculate VAT (add and remove)
Simple formulas for adding VAT to a net price and removing VAT from a gross price, with worked examples — plus a free calculator that does it for you.
VAT (value-added tax) trips people up because the same rate is used two different ways: to add tax to a price that doesn't include it, and to remove tax from a price that already does. Here are both, with the formulas and worked examples.
The two questions
- Adding VAT: you have a net (tax-exclusive) price and want the gross (tax-inclusive) price.
- Removing VAT: you have a gross price and want to find the net price and the tax inside it.
Throughout, let r be the VAT rate as a decimal — for 20%, r = 0.20.
Adding VAT to a net price
VAT amount = net × r
Gross price = net × (1 + r)
Example — net price 100, VAT 20%:
- VAT amount = 100 × 0.20 = 20
- Gross price = 100 × 1.20 = 120
Removing VAT from a gross price
This is the one people get wrong. You cannot just take 20% off the gross price — because the 20% was calculated on the smaller net figure. Instead, divide:
Net price = gross ÷ (1 + r)
VAT amount = gross − net
Example — gross price 120, VAT 20%:
- Net price = 120 ÷ 1.20 = 100
- VAT amount = 120 − 100 = 20
Notice that "add 20%" and "remove 20%" are not mirror images: 20% of 100 is 20, but the VAT inside 120 is also 20 — which is only 16.67% of the gross. That's why dividing by 1 + r matters.
Quick reference for common rates
| Rate | Add VAT (× ) | Remove VAT (÷ ) |
|---|---|---|
| 5% | × 1.05 | ÷ 1.05 |
| 19% | × 1.19 | ÷ 1.19 |
| 20% | × 1.20 | ÷ 1.20 |
Where this comes up
- Pricing — setting a shelf price that includes tax.
- Invoicing — showing net, tax, and gross separately (see what to put on an invoice).
- Expenses — pulling the VAT out of a receipt total to reclaim it.
Let the calculator do it
Rather than reaching for the formula each time, the free Business Calculators include a VAT/tax tool that adds or removes tax instantly — type an amount and a rate and read the net, tax, and gross. It runs in your browser with nothing to install, alongside calculators for margin, markup, discount and more.