Remove VAT from a Price

Enter the gross price (including VAT) to calculate the net price before VAT.

Net Price

£0.00

Before VAT

VAT Amount

£0.00

Tax portion

Gross Price

£0.00

Including VAT
Net = Gross ÷ 1.20

Batch VAT Calculator

Calculate VAT for multiple items at once. Perfect for processing receipts and expenses.

Item Description Gross (£) Net (£) VAT (£)
£0.00 £0.00
£0.00 £0.00
£0.00 £0.00
£0.00 £0.00
£0.00 £0.00
Total Gross £0.00
Total Net £0.00
Total VAT £0.00

VAT Invoice Creator

Create a VAT invoice breakdown from a gross amount for your business records.

Your Business Ltd

VAT No: GB123456789

Invoice INV-001

28 February 2026

Description Amount
Professional services £0.00
Subtotal £0.00
VAT (20%) £0.00
Total £0.00

Price Comparison Tool

Compare VAT-inclusive prices across different VAT rates or with ex-VAT prices.

When You'd Use This

Use this tool to compare B2B ex-VAT prices with consumer VAT-inclusive prices. VAT-registered businesses can reclaim VAT, so the net price is their actual cost.

Reverse VAT Lookup

Find the original gross price if you know the net price or VAT amount.

Net Price

£0.00

Before VAT

VAT Amount

£0.00

Tax portion

Gross Price

£0.00

Including VAT

Quick Formula to Remove VAT

For 20% VAT: Divide by 1.20 (or multiply by 0.8333)

For 5% VAT: Divide by 1.05 (or multiply by 0.9524)

General formula: Net Price = Gross Price ÷ (1 + VAT Rate)

UK VAT Rates at a Glance

20%
Standard Rate
÷ 1.20
Applies to:
  • Most goods & services
  • Electronics
  • Furniture
  • Professional services
5%
Reduced Rate
÷ 1.05
Applies to:
  • Home energy
  • Child car seats
  • Mobility aids
  • Sanitary products
0%
Zero Rate
÷ 1.00
Applies to:
  • Most food
  • Children's clothes
  • Books & newspapers
  • Prescription meds

Quick VAT Removal Reference

Common gross prices and their net equivalents at 20% VAT:

£60 inc VAT
£50.00
£10 VAT
£120 inc VAT
£100.00
£20 VAT
£240 inc VAT
£200.00
£40 VAT
£600 inc VAT
£500.00
£100 VAT
£1,200 inc VAT
£1,000.00
£200 VAT
£2,400 inc VAT
£2,000.00
£400 VAT
£6,000 inc VAT
£5,000.00
£1,000 VAT
£12,000 inc VAT
£10,000.00
£2,000 VAT

Common Mistake to Avoid

Don't subtract 20% to remove VAT! £120 - 20% = £96 (WRONG). The correct method is £120 ÷ 1.20 = £100. This is because VAT was calculated on the net price, not the gross price.

Understanding VAT Removal

VAT (Value Added Tax) is included in most prices you see in UK shops and online. When you need to work out the price before VAT was added, you need to "reverse" the VAT calculation. This is essential for accounting, invoicing, and tax compliance.

Why Would You Need to Remove VAT?

  • Business purchases - VAT-registered businesses can reclaim VAT, so they need to know the net cost for their accounts
  • Invoicing - Creating invoices that show net, VAT, and gross amounts separately is a legal requirement
  • Expense claims - Calculating the VAT portion of receipts for VAT returns
  • Price comparisons - Comparing B2B prices quoted without VAT to B2C prices including VAT
  • Budgeting - Understanding the actual cost of goods/services for VAT-registered businesses
  • Import/export - Calculating VAT when dealing with international trade

The Mathematics Behind VAT Removal

When VAT is added to a price, the calculation is:

Adding VAT (20%)

Gross = Net × 1.20
£100 × 1.20 = £120

To reverse this calculation and remove VAT:

Removing VAT (20%)

Net = Gross ÷ 1.20
£120 ÷ 1.20 = £100
VAT = £120 - £100 = £20

Step-by-Step: How to Remove VAT

  1. Take the gross price (the total including VAT)
  2. Identify the VAT rate (20%, 5%, or 0%)
  3. Divide by the appropriate divisor (1.20 for 20%, 1.05 for 5%)
  4. The result is the net price (before VAT)
  5. Subtract the net from gross to find the VAT amount

Alternative Method: VAT Fraction

To find just the VAT amount quickly, you can multiply by the VAT fraction:

  • For 20% VAT: VAT = Gross × (20/120) = Gross × 1/6
  • For 5% VAT: VAT = Gross × (5/105) = Gross × 1/21

This is useful when you only need the VAT amount, not the full breakdown.

UK VAT Rates Explained

The UK has three VAT rates, each applying to different types of goods and services. Understanding which rate applies is crucial for accurate calculations.

Rate Percentage Divisor Applies To
Standard 20% ÷ 1.20 Most goods and services, electronics, furniture, professional services
Reduced 5% ÷ 1.05 Home energy, children's car seats, mobility aids, sanitary products
Zero 0% ÷ 1.00 Most food, children's clothing, books, newspapers, prescription medicines
Exempt N/A N/A Insurance, finance, education, health services

Zero Rate vs Exempt

Zero-rated: VAT is charged at 0%, but you can still reclaim VAT on related purchases.

Exempt: No VAT is charged, and you cannot reclaim VAT on related purchases.

History of UK VAT Rates

The standard rate has changed several times since VAT was introduced in 1973:

  • 1973: 10% (introduction)
  • 1979: 15%
  • 1991: 17.5%
  • 2008-2009: 15% (temporary reduction)
  • 2010: 17.5% (return)
  • 2011-present: 20%

VAT Returns and Reclaiming Input VAT

VAT-registered businesses can reclaim VAT on eligible business purchases through their VAT return. Understanding how to correctly calculate and document VAT is essential for compliance.

What is Input VAT?

Input VAT is the VAT you pay on business purchases and expenses. When you're VAT-registered, you can typically reclaim this VAT by deducting it from the VAT you charge to customers (output VAT) on your VAT return.

Requirements for Reclaiming VAT

  • You must be VAT-registered
  • The purchase must be for business purposes
  • You must have a valid VAT invoice showing the VAT amount
  • The supplier must be VAT-registered
  • Keep records for at least 6 years

Items You Cannot Reclaim VAT On

  • Business entertainment - Client hospitality, event tickets
  • Cars - Unless used solely for business (e.g., taxi, driving school)
  • Goods for private use - Even if bought through the business
  • Purchases from non-VAT registered suppliers
  • Expenses before VAT registration (with some exceptions)

Important for VAT Returns

When completing your VAT return, ensure you have valid VAT invoices showing the VAT amount separately. HMRC can request these documents during an inspection, and incorrect claims can result in penalties and interest charges.

VAT Return Deadlines

Most businesses submit VAT returns quarterly. You have one calendar month and seven days after the end of your VAT period to submit your return and pay any VAT owed. Late submissions incur penalties under the new points-based system introduced in January 2023.

VAT Registration Requirements

Understanding when you need to register for VAT is crucial for business compliance. Removing VAT from prices is only relevant if you're dealing with VAT-registered businesses.

Mandatory Registration

You must register for VAT if:

  • Your VAT taxable turnover exceeds £90,000 in any 12-month period (2025/26 threshold)
  • You expect your taxable turnover to exceed £90,000 in the next 30 days alone
  • You acquire goods from EU member states worth more than £90,000

Voluntary Registration

You can choose to register voluntarily if your turnover is below the threshold. Benefits include:

  • Reclaim VAT on business purchases and expenses
  • Appear more established to other businesses
  • Required if you want to trade with certain businesses

VAT Schemes for Small Businesses

Scheme Eligibility Benefits
Flat Rate Scheme Turnover ≤ £150,000 Pay fixed % of turnover, simpler record-keeping
Cash Accounting Turnover ≤ £1.35m Pay VAT when you receive payment, not when you invoice
Annual Accounting Turnover ≤ £1.35m One annual return instead of quarterly

Frequently Asked Questions

How do I remove VAT from a price?
To remove VAT from a price, divide by 1.20 for the standard 20% rate (or 1.05 for 5% rate). For example, £120 including VAT: £120 ÷ 1.20 = £100 (net price). The VAT amount is £120 - £100 = £20. Never subtract 20% directly - this gives the wrong answer because VAT is calculated on the net price, not the gross.
Why can't I just subtract 20% to remove VAT?
Because VAT was calculated on the net price, not the gross price. If net is £100 and VAT is 20%, VAT = £20, making gross = £120. But 20% of £120 = £24, not £20. The key insight is that VAT is 20% of the original price, but only about 16.67% (1/6) of the final VAT-inclusive price. To reverse correctly, divide by 1.20.
What is the current UK VAT rate?
The UK standard VAT rate is 20% (since January 2011). There's also a reduced rate of 5% for certain goods like home energy, children's car seats, and mobility aids. Essential items like most food, children's clothing, and books are zero-rated (0%). Some services like insurance and education are VAT exempt.
Can VAT-registered businesses reclaim VAT on purchases?
Yes, VAT-registered businesses can reclaim input VAT on eligible business purchases through their VAT return. You need valid VAT invoices showing the VAT separately. Some items have restrictions including business entertainment, private vehicles, and items for personal use. Keep all invoices for at least 6 years for HMRC inspections.
What's the difference between gross and net price?
Gross price is the total price including VAT - what the customer actually pays. Net price is the price before VAT is added - the actual product/service cost. The difference between them is the VAT amount that businesses collect and pay to HMRC. B2B prices are often quoted net (ex-VAT), while consumer prices are usually gross (inc VAT).
Do I need to show VAT separately on invoices?
Yes, if you're VAT-registered, you must issue VAT invoices that show the VAT amount separately, your VAT registration number, the rate of VAT charged, and the net and gross amounts. This is a legal requirement and allows your customers to reclaim the VAT if they're VAT-registered themselves.

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Reviewed by: UK Calculator, Founder & Developer

Founder & Developer - UKCalculator.com

The UK Calculator team is the founder and developer of UKCalculator.com, providing free, accurate calculators for UK residents.

Last updated: 28 February 2026