Guide
How to Add or Remove VAT, GST or Sales Tax from a Price
To add tax, multiply the net price by (1 + rate ÷ 100): £100 + 20% VAT = £120. To remove tax from a tax-inclusive price, divide by (1 + rate ÷ 100): £120 ÷ 1.2 = £100. Don’t subtract the percentage from the gross price; that gives the wrong answer (£96).
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The formulas
| You have | You want | Formula |
|---|---|---|
| Net price (before tax) | Gross price | net × (1 + rate ÷ 100) |
| Net price | Tax amount | net × rate ÷ 100 |
| Gross price (with tax) | Net price | gross ÷ (1 + rate ÷ 100) |
| Gross price | Tax amount | gross − gross ÷ (1 + rate ÷ 100) |
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The Sales Tax & VAT Calculator adds or removes tax at any rate and shows net, tax and gross side by side.
Examples
| Example | Calculation | Result |
|---|---|---|
| Add 20% UK VAT to £250 | 250 × 1.20 | £300 (VAT £50) |
| Remove 20% VAT from £300 | 300 ÷ 1.20 | £250 net |
| Add 18% GST to ₹5,000 | 5,000 × 1.18 | ₹5,900 (GST ₹900) |
| Remove 5% UAE VAT from AED 105 | 105 ÷ 1.05 | AED 100 net |
| Add 8.25% sales tax to $40 | 40 × 1.0825 | $43.30 |
Why subtracting the percentage is wrong
VAT is calculated on the net price. A £120 total with 20% VAT means the net price is the number that becomes £120 after adding 20% of itself, which is £100. Taking 20% of £120 (£24) uses the gross price as the base and overstates the tax, leaving £96.
A quick shortcut for 20% VAT: the VAT portion of a gross price is gross ÷ 6 (because 20 ÷ 120 = 1/6). For 5%, it’s gross ÷ 21.
Frequently asked questions
What is the VAT rate in the UK?
The standard UK VAT rate is 20%. Some goods have a reduced 5% rate or are zero-rated.
Is GST the same as VAT?
They work the same way: tax added at each stage of sale. Countries like India, Canada, Australia and Pakistan call it GST.
Does US sales tax work the same way?
The math is the same, but US sales tax is usually added at checkout rather than included in shelf prices, and rates vary by state and city.
Tools used in this guide
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