How to Remove 20% VAT from a Gross Price
If the whole price includes VAT at 20%, divide the gross amount by 1.20 to find the net price. VAT is the gross minus that net amount. Removing VAT here means separating a price, not cancelling VAT registration.
By SoloCalc · Content updated 23 October 2026
Why dividing works
VAT is calculated on the net price. Gross = net × (1 + rate), so reverse the multiplication: net = gross ÷ 1.20. Then VAT = gross − net. For £120.00 including VAT, net is £100.00 and VAT is £20.00.
The original net represents 100 parts and VAT adds 20 parts: the gross is 120 parts. You need 100/120 of the gross for net, not 80/100. The VAT fraction of gross is rate ÷ (1 + rate), which is one sixth at the current standard rate. Enter your own price in the VAT add/remove calculator for net, VAT and gross with the formula shown.
Why subtracting 20% gives the wrong answer
A 20% reduction of £120.00 gives £96.00, not £100.00. That is a discount on the gross, not reversal of a tax charged on net. The VAT share is approximately 16.6667% of gross; do not substitute a rounded percentage such as 16.67% for the exact division when reconciling pennies.
Worked prices, including awkward pennies
| Gross price | Net: gross ÷ 1.20 | VAT: gross − net |
|---|---|---|
| £120.00 | £100.00 | £20.00 |
| £300.00 | £250.00 | £50.00 |
| £1,000.00 | £833.33 | £166.67 |
| £19.99 | £16.66 | £3.33 |
SoloCalc rounds the net to pennies, then calculates VAT as the difference from the gross. For £1,000.00, the unrounded net repeats; displayed net and VAT still add back to the exact entered gross. An invoice can differ by pennies where VAT was calculated and rounded line by line. Do not replace a supplier's invoice record or reclaim decision with this illustration.
Check the receipt before reversing VAT
- Confirm the amount really includes VAT. A net quote must have VAT added, not removed. A payment alone does not prove VAT was charged.
- Check the applicable rate and supply. Standard-rate division is not valid for the whole bill if lines use different rates.
- Separate mixed-rate lines or rate totals and apply the matching formula to each. Do not choose an average rate by guesswork.
- Keep the invoice and check the rules for reclaiming input VAT separately. Extracting a VAT number does not establish entitlement to reclaim it.
What about 5%, zero-rated or exempt supplies?
At 5%, use divisor 1.05: £105.00 gross gives £100.00 net and £5.00 VAT. At 0%, net and gross match and there is no VAT amount to extract.
Zero-rated supplies are still taxable supplies. Exempt and outside-scope supplies are different categories, not alternative names for a 0% rate. Never assume VAT was included on an exempt supply. The correct classification depends on the supply and circumstances; check GOV.UK VAT rates, rather than relying on arithmetic to classify it.
This guide explains the reversal, not whether your business must register. For that separate question use the VAT registration threshold checker. For sales versus profit definitions read the income figures guide; for other tasks browse SoloCalc's calculators.
Official sources and limits
- GOV.UK: current UK VAT rates
- HMRC VAT Notice 700: VAT fractions and calculation/rounding guidance
- GOV.UK: charging, reclaiming and recording VAT
General arithmetic explanation, not tax advice or a VAT reclaim determination. Worked results call the same local arithmetic as the VAT calculator; no amounts are submitted to an external service.