How to remove VAT from a price
Start with the total price including VAT, then choose the rate already included in that price. Divide by 1 plus the rate to recover the price excluding VAT. The difference between the two prices is the VAT element. Only use this breakdown where VAT is actually included at the chosen rate.
The reverse VAT formula
Price excluding VAT = price including VAT ÷ (1 + rate), with the rate written as a decimal. Then VAT amount = price including VAT − price excluding VAT.
At 20%, use 0.20 and divide by 1.20. At 5%, use 0.05 and divide by 1.05. At 0%, there is no VAT amount to remove. Results are rounded to pennies: the net price is rounded first and the VAT is the remaining part of the entered gross price.
Worked examples: removing 20% and 5% VAT
- 20% VAT: £120.00 including VAT ÷ 1.20 = £100.00 excluding VAT. VAT = £120.00 − £100.00 = £20.00.
- 5% VAT: £105.00 including VAT ÷ 1.05 = £100.00 excluding VAT. VAT = £105.00 − £100.00 = £5.00.
Why subtracting 20% is wrong
The 20% was added to the net price, not charged on the final VAT-inclusive price. Subtracting 20% of the gross therefore removes too much. At 20%, VAT makes up 20 out of every 120 parts of the gross: one sixth, not one fifth.
For a more detailed receipt walkthrough, see how to remove 20% VAT, including mixed-rate bills and invoice rounding.
Check the VAT treatment first
Here, “reverse VAT” means working backwards from a VAT-inclusive price. It is not the VAT domestic reverse charge, which is a separate accounting mechanism.
The standard UK VAT rate is 20%, the reduced rate is 5% and the zero rate is 0%. The correct treatment depends on the supply and circumstances. A custom percentage is an arithmetic option, not another official UK rate category.
Zero-rated is not the same as VAT-exempt or outside the scope of VAT. Zero-rated supplies are taxable at 0%; selecting 0% here does not determine the legal treatment or input VAT recovery. If you are checking registration rather than a price, use the VAT registration threshold calculator.
Frequently asked questions
How do I calculate VAT backwards?
Divide the VAT-inclusive price by 1 plus the rate expressed as a decimal. At 20%, divide by 1.20; at 5%, divide by 1.05. Subtract the resulting net price from the gross price to find the VAT element.
Why can't I just take 20% off the price?
VAT is calculated on the price excluding VAT, not on the final price. Taking 20% off the gross removes too much. The VAT element at 20% is one sixth of the VAT-inclusive price.
Can I reverse VAT at a custom rate?
Yes. Enter the rate as a percentage, with up to two decimal places. The same division formula applies. Custom rates are for arithmetic, not a confirmation that the rate is valid for your supply.
Does selecting 0% mean the supply is VAT-exempt?
No. Zero-rated supplies are taxable at 0%. Exempt supplies and transactions outside the scope of VAT are different treatments. A zero result does not classify the supply or confirm a right to reclaim VAT.
Can I use this for a receipt with different VAT rates?
Calculate each rate group separately. Do not apply a single rate to a total containing standard-rated, reduced-rated and zero-rated items. Check the supplier's VAT invoice for the actual breakdown; invoice rounding can differ from rounding a single combined total.
Sources and calculation scope
- GOV.UK: VAT rates — UK rate categories and supply-dependent treatment.
- HMRC: VAT guide (Notice 700) — VAT fractions, invoices and rounding.
- GOV.UK: Charge, reclaim and record VAT — charging and recovery guidance.
Rate verification date: 23 October 2026. Both VAT price tools use the same tested calculation engine. No entered prices are submitted to SoloCalc; no AI or external calculation service is used.