How to add VAT to a price: the simple sum with examples
Adding VAT is one of the most common sums in business. The quick answer for the standard 20% rate: multiply the price by 1.2.
Why multiplying by 1.2 works
A price plus 20% is the same as 100% of the price plus another 20%, which is 120%, or 1.2 times the original. So a £250 net price becomes £250 × 1.2 = £300 including VAT, of which £50 is VAT.
Examples at 20%
| Net price | VAT | Price including VAT |
|---|---|---|
| £10.00 | £2.00 | £12.00 |
| £49.99 | £10.00 | £59.99 |
| £125.00 | £25.00 | £150.00 |
| £1,000.00 | £200.00 | £1,200.00 |
Other UK VAT rates
- Reduced rate, 5%: multiply by 1.05. This covers things like home energy and children's car seats.
- Zero rate, 0%: no VAT is added, for most food, children's clothes and books.
- Exempt: no VAT at all, for things like insurance and most financial services. Exempt is different from zero-rated for businesses reclaiming VAT.
Mistakes to avoid
Removing VAT by taking off 20%. To get back from £300 to £250 you divide by 1.2. Taking 20% off £300 gives £240, which is wrong. Our guide to removing VAT explains why.
Rounding each line differently. On invoices with many lines, round consistently, either per line or on the total, so the VAT matches your accounting software.
Charging VAT when you're not registered. You can only charge VAT if you're VAT-registered. Registration is compulsory once your taxable turnover goes over £90,000 in a rolling 12 months.
Do it instantly
The VAT calculator adds or removes VAT at any rate, and shows the net, VAT and gross figures together.
