Question 1

How do I remove VAT from a price in the UK?

Accepted Answer

To remove 20% UK VAT from a VAT-inclusive price, divide by 1.20. Example: £120 ÷ 1.20 = £100 (the ex-VAT price). The VAT amount is £20. For the 5% reduced rate, divide by 1.05. Our reverse VAT calculator above does this automatically — just select 'Remove VAT' mode and enter your gross amount.

Question 2

How do I add VAT to a price?

Accepted Answer

To add 20% VAT, multiply the net (ex-VAT) price by 1.20. Example: £100 × 1.20 = £120 (VAT-inclusive price). The VAT amount is £20. Formula: VAT amount = net price × (VAT rate / 100); gross = net + VAT amount.

Question 3

How much VAT on £100?

Accepted Answer

At the UK standard rate of 20%, the VAT on £100 is £20, making the total price £120. At the reduced 5% rate, VAT is £5, total £105. If a price is already VAT-inclusive at 20%, the VAT element within £100 is £16.67 (£100 ÷ 1.20 × 0.20).

Question 4

How much VAT on £1000?

Accepted Answer

At 20% UK VAT: £1,000 × 20% = £200 VAT, total £1,200. To extract VAT from a £1,000 gross price: £1,000 ÷ 1.20 = £833.33 net, VAT element = £166.67.

Question 5

What is the UK VAT rate in 2026?

Accepted Answer

The UK standard VAT rate is 20% in 2026, unchanged since January 2011. A reduced 5% rate applies to domestic energy, women's sanitary products, and children's car seats. Zero-rated goods include most food, children's clothing, books, and public transport. The VAT registration threshold is £90,000 annual taxable turnover.

Question 6

What is the difference between standard, reduced, and zero rate VAT?

Accepted Answer

Standard rate (20% UK) applies to most goods and services. Reduced rate (5% UK) applies to specific listed goods like domestic energy. Zero rate (0%) applies to goods like food and books — these are still VAT-rated but at 0%, and businesses can reclaim input VAT. Exempt goods are outside the VAT system entirely (e.g. financial services, education).

Question 7

What is reverse VAT?

Accepted Answer

Reverse VAT (also called 'backing out VAT' or 'VAT extraction') means calculating the original price before VAT from a VAT-inclusive total. Formula: Pre-tax price = Gross ÷ (1 + VAT rate/100). Example: £240 gross at 20% VAT = £240 ÷ 1.20 = £200 ex-VAT. The VAT element is £40.

Question 8

How is VAT different from sales tax?

Accepted Answer

VAT (Value Added Tax) is collected at every stage of the supply chain, with businesses reclaiming input VAT they pay on purchases. Only the final consumer bears the full cost. US sales tax is collected only at the final point of sale to the consumer. Both result in the consumer paying a percentage tax, but the collection mechanism differs significantly.

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