To remove VAT from a price, divide the VAT-inclusive price by 1 plus the VAT rate. For the UK standard rate of 20%, divide by 1.20: a £120 price including VAT is £100 before VAT, and the VAT inside it is £20. For the 5% reduced rate, divide by 1.05: £105 becomes £100 net with £5 of VAT.
That is the whole trick — but there is one mistake almost everyone makes the first time, and it quietly produces wrong figures on invoices. This guide covers the formula, why the obvious method fails, worked examples at 20% and 5%, and a quick-reference table. If you would rather skip the maths, our VAT Calculator does it in one click for any rate.
First, the two prices you are moving between
Every VAT calculation involves two versions of the same price. The gross price is the figure your customer sees and pays — it already includes VAT. The net price is the figure before VAT is added. When you buy something in a shop, the shelf price is gross. When a business files its VAT return, it reports the net figure and the VAT separately.
When you remove VAT, you are not taking a percentage off the gross price. You are working backwards to find the net price that, once VAT was added, produced the gross price you started with.
The formula
Net price = Gross price ÷ (1 + VAT rate ÷ 100)
VAT amount = Gross price − Net price
In practice, you just need the right divisor. For a 20% rate, divide by 1.20. For 5%, divide by 1.05. For Germany’s 19% rate, divide by 1.19. This works for any rate, because it simply reverses how VAT was added in the first place.
Why you can’t just subtract 20%
This is the mistake that catches almost everyone. Take a £120 price including 20% VAT. Subtracting 20% gives £120 − £24 = £96. That is wrong.
The reason is the base: VAT was calculated as 20% of the net price, not 20% of the gross price. The net price was £100, so the VAT was £100 × 20% = £20, and £100 + £20 = £120. Subtracting 20% of £120 removes £24, which is too much.
Correct method: £120 ÷ 1.20 = £100 net, so VAT = £120 − £100 = £20.
A useful consequence: at 20%, the VAT inside a gross price is exactly one sixth (16.67%) of the total, not 20%.
Worked example: removing 20% VAT
A product costs £240 including 20% VAT.
Net = £240 ÷ 1.20 = £200
VAT = £240 − £200 = £40
Check: £200 × 20% = £40, and £200 + £40 = £240. The maths closes.
Real prices rarely round so neatly. A £59.99 retail price: £59.99 ÷ 1.20 = £49.99 net, and the VAT is £10.00. Keep two decimal places through the calculation and round only the final figure.
Worked example: removing 5% VAT
A service costs £210 including 5% VAT.
Net = £210 ÷ 1.05 = £200
VAT = £210 − £200 = £10
If you are unsure which rate applies to a particular item, check the UK government’s guide to VAT rates on different goods and services before you calculate — using the wrong rate is a far more common error than getting the division wrong.
Quick-reference table
| Gross price | VAT rate | Net price | VAT amount |
|---|---|---|---|
| £60 | 20% | £50 | £10 |
| £120 | 20% | £100 | £20 |
| £240 | 20% | £200 | £40 |
| £600 | 20% | £500 | £100 |
| £1,200 | 20% | £1,000 | £200 |
| £105 | 5% | £100 | £5 |
| £210 | 5% | £200 | £10 |
| £525 | 5% | £500 | £25 |
| £1,050 | 5% | £1,000 | £50 |
The VAT fraction shortcut
If you only need the VAT amount, there is a faster route: VAT = Gross × Rate ÷ (100 + Rate).
At 20%, that simplifies to VAT = Gross ÷ 6. So £240 ÷ 6 = £40. At 5%, VAT = Gross ÷ 21. So £210 ÷ 21 = £10.
This is why bookkeepers say “divide by six” for 20% VAT — it gives you the tax portion directly, without first finding the net price.
Removing VAT at any other rate
Nothing about the method is UK-specific. Replace the divisor with 1 plus whatever rate is charged: for a 19% rate, divide by 1.19; for 23%, divide by 1.23; for 25%, divide by 1.25. The same VAT Calculator handles any rate, and our Percentage Calculator covers increases, decreases and reverse percentages more generally.
Common mistakes to avoid
- Subtracting the percentage instead of dividing — the most common error, and the one that produces a net price that is too low.
- Using the wrong rate — standard, reduced and zero-rated items can sit on the same invoice, so check each line.
- Confusing exempt with zero-rated — both show no VAT to the customer, but they are different for a VAT return. Zero-rated items, such as most food and children’s clothing in the UK, still count as taxable supplies; exempt items do not.
- Rounding every line separately — small penny differences add up across an invoice. Calculate on the totals where you can, and round only at the end.
Frequently asked questions
How do I take 20% VAT off a price?
Divide the gross price by 1.20. For example, £120 ÷ 1.20 = £100 ex-VAT, so the VAT removed is £20.
How much VAT is in a £120 price?
At 20%, £20. A quick method: divide the gross price by 6 — £120 ÷ 6 = £20.
How do I remove VAT in Excel or Google Sheets?
Use =A1/1.2 for the net price at 20%, and =A1/6 for the VAT amount. For 5%, use =A1/1.05 for the net and =A1/21 for the VAT. Replace 1.2 with 1 plus your rate for any other percentage.
Is removing GST the same as removing VAT?
Yes. GST in Australia, New Zealand, India and other countries is added and removed in exactly the same way — divide the GST-inclusive price by 1 plus the GST rate to get the GST-exclusive price.
