Clear Calculators

VAT guide

VAT rates and invoice checks explained

VAT arithmetic is simple once the right rate is known. The harder part is knowing whether the amount is net or gross, whether the rate applies to the whole supply, and how invoice rounding has been handled.

Quick version: to add 20% VAT, multiply the net amount by 1.20. To remove 20% VAT from a VAT-inclusive amount, divide the gross amount by 1.20. Treat the result as an arithmetic check, not a ruling on which VAT rate applies.

Net, VAT and gross mean different things

The net amount is the price before VAT. The VAT amount is the tax added to that price. The gross amount is the total after VAT. If a quote says GBP 100 plus VAT at 20%, the gross total is GBP 120. If a receipt says GBP 120 including VAT at 20%, the net amount is GBP 100 and the VAT portion is GBP 20.

This distinction matters because removing VAT is not the same as subtracting 20% from the gross total. At 20%, VAT is one sixth of the VAT-inclusive price, because the gross amount is 120% of the net amount.

Common UK VAT rate labels

Standard rate

20% applies to many goods and services, but not everything. It is the common default for simple checks when the supply is standard-rated.

Reduced rate

5% can apply to some qualifying supplies. Conditions matter, so a reduced rate should be checked against current HMRC guidance.

Zero, exempt or outside scope

0% VAT, exempt supplies and outside-scope items are not the same thing for records, returns or reclaiming input VAT.

Invoice totals can differ by a penny

VAT can be rounded on each invoice line or calculated once on a subtotal. Those two methods can produce a small penny difference, especially when there are several quantities, discounts or shipping lines. A calculator is useful for checking direction and reasonableness, but the invoice system may have its own rounding policy.

When checking an invoice, keep the inputs separate: quantity, unit net price, discount, shipping, VAT rate and whether the displayed total is net or gross. Mixing those up is the most common cause of a VAT result that looks wrong.

When to check HMRC guidance

HMRC explains that the VAT rate can depend on who provides or buys the supply, where it is provided, how it is presented, the precise nature of the goods or services, evidence and record keeping. That means a calculator can show the arithmetic, but it cannot decide the VAT treatment for a particular business situation.

Check official guidance or a suitable adviser when the answer affects a VAT return, pricing decision, contract, import/export treatment, charity supply, construction work, food and catering, health or education supply, or anything with special conditions.

Useful tools

Add or remove VAT Check percentage changes Convert quantities

Sources reviewed 19 June 2026: GOV.UK VAT rates on different goods and services, last updated 3 June 2026 at time of review. This guide is general information only, not tax advice.