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
- £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.