Adding and removing VAT
To add 20% VAT, multiply the net price by 1.2. To remove it from a VAT-inclusive price, divide by 1.2. A common mistake is to take 20% off the gross price, which gives too low a figure: 20% of £120 is £24, but the VAT in £120 is actually £20.
UK VAT rates
The standard rate of 20% applies to most goods and services. The reduced rate of 5% applies to items such as domestic energy. The zero rate applies to most food, books and children's clothing. Some things, such as insurance and many financial services, are exempt from VAT altogether.
Businesses must register for VAT once their taxable turnover goes over the registration threshold. Check HMRC's guidance for the current threshold and the rate that applies to what you sell.