Add VAT vs Remove VAT: UK Examples & Formulas
Last reviewed 14 August 2026
Published and source-checked by Mehmood Rajoka, founder and publisher. Review our editorial policy.
Adding VAT means calculating the tax on top of a net (ex-VAT) price. Removing VAT means extracting the tax already included in a gross (inc-VAT) price. The formulas are different: adding multiplies by the rate, removing divides by 1 + the rate.
Whether you're quoting a price to a customer or working backwards from a receipt, understanding the difference between adding and removing VAT is essential. This page explains both methods with the standard UK rate of 20%.
Adding starts from the price before VAT. At 20%, the VAT is one fifth of that net amount, so the gross multiplier is 1.20. Removing starts from a total that already contains both net and VAT. The included VAT is one sixth of a 20% gross amount, so the correct reverse operation is division by 1.20 rather than subtracting 20%.
The arithmetic only works after the supply's VAT treatment is known. Standard-rated, reduced-rated, zero-rated and exempt supplies are not interchangeable. Mixed-rate invoices should be calculated by rate group, and an extracted VAT amount is not by itself evidence that input VAT can be reclaimed.
At the reduced 5% rate, use 1.05 instead of 1.20: £200 net becomes £210 gross, while £210 gross divided by 1.05 returns £200 net. For a zero-rated taxable supply the gross and net figures are equal, but that does not make the supply exempt. Keep the rate and treatment beside the calculation so another person can reproduce it.
What each option means
Add VAT
Start with a net amount (excluding VAT) and calculate the gross total. Formula: Net × 1.20 = Gross. Example: £100 × 1.20 = £120.
Remove VAT
Start with a gross amount (including VAT) and work out the net amount and VAT portion. Formula: Gross ÷ 1.20 = Net. Example: £120 ÷ 1.20 = £100 net, £20 VAT.
Key differences
| Aspect | Add VAT | Remove VAT |
|---|---|---|
| Starting point | Net amount (excl. VAT) | Gross amount (incl. VAT) |
| Formula (20% rate) | Net × 1.20 | Gross ÷ 1.20 |
| Common use | Quoting prices, creating invoices | Checking receipts, reclaiming VAT |
| VAT amount from £100 | £100 net → £20 VAT → £120 gross | £100 gross → £16.67 VAT → £83.33 net |
Best for
Add VAT when…
You know the price before tax and need to calculate the total a customer will pay, or you're creating a VAT invoice.
Remove VAT when…
You have a total price that includes VAT and need to find the VAT amount — for example, when reclaiming input VAT or checking a supplier invoice.
Assumptions and caveats
- Examples use the standard UK VAT rate of 20%
- Reduced (5%) and zero (0%) rates apply to some goods and services
- VAT treatment varies — always confirm the correct rate for your goods or services
- This is a general explanation, not VAT advice
Try the calculators
Related guides
Frequently Asked Questions
Official sources
Rates and thresholds are checked against the following primary sources. Review dates are shown on the relevant guide or methodology page.
Scope: The comparison explains arithmetic after a VAT treatment is known. It does not decide the correct rate, exemption, place of supply or input-tax recovery.
Last reviewed: 14 August 2026