Every example at a glance
5 scenarios, all worked the same way. Tap a row to jump to the full breakdown.
| Amount | VAT | Net (excl.) | Gross (incl.) |
|---|---|---|---|
| VAT on £100 | £20.00 | £100.00 | £120.00 |
| VAT in £120 | £20.00 | £100.00 | £120.00 |
| VAT in £1,000 | £166.67 | £833.33 | £1,000.00 |
| VAT on £1,000 | £200.00 | £1,000.00 | £1,200.00 |
| VAT on £5,000 | £1,000.00 | £5,000.00 | £6,000.00 |
How it is worked out
Which way you are working decides the arithmetic, and this is where the common mistake lives.
Extracting VAT: VAT = gross ÷ 6
Adding VAT to a net figure means multiplying by 1.20. Taking VAT out of a gross figure means dividing by 1.20 to recover the net, then subtracting — which is the same as dividing the gross by six at the 20% rate. Subtracting 20% from the gross is not the same operation and gives the wrong answer: 20% of £120 is £24, but the VAT inside £120 is £20.
At 5% the divisor is 21 rather than 6; at 0% there is nothing to extract.
Each example in full
Every card below opens in the VAT Calculator with its own numbers already filled in, so you can change one figure and see what moves.
VAT on £100
£100 is the figure people reach for when they want to see how VAT works at all, because the arithmetic is clean enough to check in your head and then apply to a real invoice.
Open this one in the VAT Calculator →VAT in £120
£120 including VAT is the textbook case: it comes back to exactly £100 net, which makes it the clearest demonstration that you divide rather than subtract.
Open this one in the VAT Calculator →VAT in £1,000
£1,000 including VAT does not split into round numbers, which is precisely why it catches people out — the net figure is £833.33, not £800.
Open this one in the VAT Calculator →VAT on £1,000
A £1,000 net invoice is around the point where getting VAT wrong stops being a rounding annoyance and starts being a sum you would notice missing.
Open this one in the VAT Calculator →VAT on £5,000
At £5,000 net the VAT alone is £1,000, which is why cash-flow planning around VAT return dates matters as much as the arithmetic does.
Open this one in the VAT Calculator →What these figures do not include
- Reduced-rate (5%) and zero-rated supplies, and items that are exempt or outside the scope of VAT altogether.
- Whether the supplier is VAT-registered at all. Below the registration threshold no VAT is charged.
- The flat-rate scheme, the margin schemes and cash accounting, all of which change what a business actually pays over.
- Reverse-charge supplies, common in construction and in cross-border services.
- Partial exemption, where only some of the input VAT can be reclaimed.
Frequently asked questions
Why is the VAT in £120 not £24?+
Because £120 is the figure after VAT was added, so the 20% was calculated on the £100 net, not on the £120 gross. Working backwards, divide the gross by 1.20 to get £100 net and the difference — £20 — is the VAT. Dividing the gross by six gives the same answer in one step.
Which figure goes on an invoice?+
All three, normally: the net amount, the VAT charged, and the gross total. A valid VAT invoice must show the VAT separately along with the supplier’s registration number and the rate applied.
Does the customer or the business bear the VAT?+
A VAT-registered business reclaims the VAT it pays on purchases and hands over the VAT it charges, so it is a pass-through. The cost lands on the final non-registered consumer, who has nobody to reclaim from.