How to calculate VAT in the UK
VAT (Value Added Tax) is a tax on most goods and services in the UK. If you're VAT-registered you charge it on your sales (output VAT) and reclaim it on your purchases (input VAT). The maths is simple once you know whether you're working from a net or a gross figure.
Adding VAT (net → gross)
Multiply the net amount by 1 + the VAT rate. At 20%: £100 × 1.20 = £120 (£20 VAT).
Removing VAT (gross → net)
Divide the gross amount by 1 + the VAT rate. At 20%: £120 ÷ 1.20 = £100 net, leaving £20 VAT.
UK VAT rates
- Standard rate — 20% (most goods and services)
- Reduced rate — 5% (e.g. domestic fuel and power, children's car seats)
- Zero rate — 0% (e.g. most food, books, children's clothes)