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Home » How to calculate VAT

How to calculate VAT

How to calculate VAT is a question many people tend to ask. Calculating VAT involves solving very basic arithmetic equations using a normal calculator.

How to add VAT

  • VAT exclusive amount * (1 + VAT rate) = VAT inclusive amount
  • Amount without VAT * (1.XX) = Amount with VAT

E.g:

  • £100.00 * (1 + 0.2) = £120.00 (VAT inclusive)
  • £100.00 * 1.2 = £120.00 (VAT inclusive)

The VAT amount when adding

  • VAT exclusive amount * VAT rate = VAT amount to add on

E.g: £100.00 * 0.2 = £20.00 (VAT amount to add on)

How to remove VAT

  • VAT inclusive amount / (1 + VAT rate) = VAT exclusive amount

E.g: £120.00 / (1 +0.2) = £100.00 (VAT exclusive)

The VAT amount when removing VAT

  • (VAT inclusive amount * VAT rate) / (1 + VAT rate) = VAT amount taken away

E.g: (£120.00 * 0.2) / (1 + 0.2) = £20.00 (VAT amount taken away)

  • A short-cut for 20% VAT rates: VAT inclusive amount / 6 = VAT amount taken away

Please note: VAT rates should normally be entered as decimals. For example, 20% is the same as 0.20 and 5% is the same as 0.05.

Thank you for reading our how to calculate VAT guide.

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