Why can I not just subtract 20% to remove UK VAT?

Because VAT is calculated as a percentage of the *net* price, not the *gross* price. If you subtract 20% from £120, you get £96. But if you add 20% back to £96, you only get £115.20. To backward-solve correctly, you must divide by 1.20 (which is equivalent to subtracting 16.67% of the gross price).

What is input VAT vs output VAT?

Input VAT is the tax a business pays to suppliers on business purchases. Output VAT is the tax a business collects from customers on sales. If Output VAT is higher than Input VAT, the business pays the difference to the government. If Input VAT is higher, the business gets a refund.

Business Tool

VAT Calculator

Add or extract Value Added Tax (VAT) dynamically using standard European, UK, or custom tax rates. Toggle instantly between tax-inclusive and tax-exclusive calculations.

Interactive VAT Calculator Workspace

Live Solver

Net Amount (Before VAT) ($)

VAT Percentage Rate (%)

Apply Regional presets:

Tax Allocation Breakdown

Net Exclusive Price:$300.00

VAT Portion (20%):$60.00

Gross Price (VAT Inclusive):$360.00

Mathematical Formula & Variables

Equation ModelVAT Amount = Gross Price - (Gross Price / (1 + VAT % / 100))

To add VAT to a net price, multiply the net price by the VAT percentage. To remove VAT from a gross price, divide the gross price by (1 + VAT rate) to find the net price, then subtract net from gross.

Variable Definitions

Symbol	Description
Net Price	The price excluding VAT (Value Added Tax)
VAT %	The statutory Value Added Tax percentage rate
VAT Amount	The value of tax applied or extracted
Gross Price	The total price including VAT

How to Use the VAT Calculator

Select a popular preset VAT rate (e.g., UK 20%, Germany 19%, Ireland 23%) or select "Custom".
Toggle the calculation direction: "Add VAT" (Net to Gross) or "Remove VAT" (Gross to Net).
Enter the numerical monetary amount in the field.
Observe the instant tax breakdown, displaying Net Price, VAT Amount, and Gross Price.

Practical Example Calculation

Scenario Context: You receive a consulting invoice for £1,200 gross in London. The UK VAT rate is 20%. How much VAT is included in the bill, and what is the pre-tax cost?

Step 1: Identify Gross Price = £1,200 and VAT rate = 20% (0.20).

Step 2: Find Net Price = Gross Price / (1 + VAT Rate) = £1,200 / 1.20 = £1,000.

Step 3: Subtract net from gross to find VAT: VAT Amount = Gross Price - Net Price = £1,200 - £1,000 = £200.

The pre-tax service rate is £1,000, and the VAT component paid is £200.

Frequently Asked Questions

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