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Reverse VAT Calculator — Remove VAT from a Price
Removing VAT (a reverse VAT calculation) works backwards from a VAT-inclusive gross price to find the net amount and the VAT inside it. The correct formula is net = gross / (1 + rate) — NOT gross × (1 − rate), which is a common error (£120 × 0.8 = £96 is wrong). Equivalently you can extract the VAT directly with the VAT fraction: at the UK standard 20% rate the fraction is 1/6, so VAT = gross × 1/6; at the reduced 5% rate it is 1/21. For a £120 inclusive price at 20%: net = 120 / 1.2 = £100 and VAT = 120 × 1/6 = £20. Enter your gross price and rate above to remove VAT instantly. Free, no login.
Reverse formula: net = gross / (1 + rate) — extract the net amount from a VAT-inclusive price
- VAT amount = gross − net (the VAT portion inside the total)
- VAT fraction shortcut: 20% → 1/6, 5% → 1/21 (VAT = gross × fraction)
- Common error to avoid: net ≠ gross × (1 − rate). At 20%, £120 × 0.8 = £96 is WRONG
- Worked example — £120 inclusive @ 20%: net = 120 / 1.2 = £100, VAT = 120 × 1/6 = £20
- Worked example — £105 inclusive @ 5%: net = 105 / 1.05 = £100, VAT = 105 × 1/21 = £5
- UK rate bands to reverse from: standard 20%, reduced 5%, zero 0%
Frequently asked questions
How do I remove VAT from a price?
Divide the gross (VAT-inclusive) price by 1 plus the rate: net = gross / (1 + rate). To remove 20% VAT from £120: net = 120 / 1.2 = £100, and the VAT is £120 − £100 = £20. Do NOT multiply by (1 − rate) — that gives the wrong answer (£120 × 0.8 = £96). A quicker route is the VAT fraction: at 20% the fraction is 1/6, so VAT = 120 × 1/6 = £20 directly.
What is the VAT fraction and why is it 1/6?
The VAT fraction is the multiplier that extracts VAT from a VAT-inclusive price in one step. At the 20% standard rate, VAT is 20/120 of the gross = 1/6, so VAT = gross × 1/6. At the 5% reduced rate it is 5/105 = 1/21. Using the fraction avoids the common mistake of multiplying by 0.8: on £120 the correct VAT is 120 × 1/6 = £20, leaving a net of £100.
Does reverse VAT work for any rate?
Yes. The formula net = gross / (1 + rate) works for any VAT rate — just use the rate that applied to the sale. For the UK that is usually 20% (standard) or 5% (reduced); for other countries use their standard rate (Ireland 23%, Germany 19%, and so on). The VAT-fraction shortcut changes with the rate too: it is 1/6 at 20% and 1/21 at 5%, but you can always fall back to gross / (1 + rate) for any percentage.