How to calculate VAT
To add VAT, multiply the net price by one plus the rate. To take VAT out of a gross price, divide by one plus the rate — never just subtract the percentage.
Skip the maths and use the sales tax, vat and gst calculator
The formula
Gross = net × (1 + rate). Net = gross ÷ (1 + rate). VAT = gross − net.
Step by step
- Write the rate as a decimal, so 20% becomes 0.20.
- To add VAT, multiply the net price by 1 plus that decimal.
- To remove VAT, divide the gross price by 1 plus that decimal.
- The VAT itself is the difference between the two prices.
Worked example
A net price of 200 at 20%
- Gross = 200 × 1.20 = 240
- Back the other way: 240 ÷ 1.20 = 200
- VAT = 240 − 200 = 40
The gross price is 240 and the VAT is 40.