How do I remove VAT from a gross price?
Divide by 1 plus the rate — for 20% VAT, divide by 1.2. Subtracting 20% from the gross price is the most common error and understates the net figure.
Calculate VAT or sales tax instantly. Add tax to a net price or extract tax from a gross price. Works with any tax rate worldwide.
VAT added = net × rate. Gross = net × (1 + rate). Net from gross = gross ÷ (1 + rate). VAT within gross = gross × rate ÷ (1 + rate).
A £200 net invoice at 20% VAT becomes £240 gross. Working backwards from £240: net is £200 and the VAT element is £40 (240 × 20 ÷ 120).
Divide by 1 plus the rate — for 20% VAT, divide by 1.2. Subtracting 20% from the gross price is the most common error and understates the net figure.
The UK uses 20% standard, 5% reduced and 0% zero-rated. EU standard rates range from 17% to 27%, so always confirm the country and category before invoicing.
In the UK, once taxable turnover passes the registration threshold in any rolling 12 months. Voluntary registration can pay off if most of your customers are VAT-registered businesses.