What is VAT?
VAT (Value Added Tax) is a consumption tax placed on a product whenever value is added at each stage of the supply chain, from production to the point of sale. It is the most common form of sales tax in Europe and many other countries.
How do I add VAT to a net price?
Multiply the net price by (1 + VAT rate / 100). For example, to add 20% VAT to £100: £100 × 1.20 = £120. The VAT amount is £20.
How do I remove VAT from a gross price?
Divide the gross price by (1 + VAT rate / 100). For example, to remove 20% VAT from £120: £120 ÷ 1.20 = £100. The VAT amount is £20.
What is the standard VAT rate in the UK?
The standard VAT rate in the UK is 20%. There are also reduced rates of 5% (e.g., domestic energy) and 0% (e.g., most food, children's clothing) for certain goods and services.
Is VAT the same as sales tax?
They are similar but not identical. VAT is charged at every stage of production and distribution, while sales tax is only charged at the final point of sale to the consumer. The end price to the consumer can be the same, but the collection mechanism differs.