BEHIND THE NUMBERS
How this calculation works
Worked example
£120 ÷ 1.20 = £100 net. The difference is £20 VAT.
Example result: £100.00
Why removing 20% is a division
The VAT is 20% of the net price. Once VAT has been added, the gross price is 120% of net, so dividing by 1.20 recovers the original amount. Subtracting 20% of gross removes too much.
Zero-rated is a specific tax treatment
A zero rate still describes a VAT-rated supply. Exemption involves different rules for registration turnover and recovery of input VAT. Use the zero-rate option only where the supply qualifies.
Keep the invoice consistent
For a single gross price the net is rounded first and VAT is the difference. For an invoice containing mixed rates, calculate each rate group or line using a consistent permitted rounding policy.
Assumptions and rounding
- An ordinary VAT-rated supply with the correct rate already selected.
- No exchange-rate conversion; UK uses GBP, Russia uses RUB.
Questions about this calculator
How much VAT is inside a £120 standard-rated total?
£20. The net amount is £100.
Can I use a Flat Rate Scheme percentage?
No. Flat Rate Scheme payments are based on VAT-inclusive turnover and are a different calculation from adding a tax rate to a net price.
Does Northern Ireland always use different rates?
The arithmetic for the selected domestic rate is the same. Goods movements and cross-border treatment need the applicable NI rules before choosing a rate.