How to calculate VAT backwards from gross to net
For a price that includes 20% VAT, divide the gross figure by 1.20 to find the net price. Subtract the net figure from the gross price to isolate VAT. The equivalent shortcut is to divide the gross price by six to find the VAT.
Worked example on a £120 receipt
£120 ÷ 1.20 = £100 net. The difference is £20 VAT. Subtracting 20% from £120 would give £96 because the VAT was originally charged on the £100 net figure.
Before reclaiming VAT
Check the actual rate and evidence for the purchase. If a receipt mixes rates, split the lines by rate before calculating. Reclaiming input VAT generally requires VAT registration, a qualifying business purchase and appropriate evidence, usually a valid VAT invoice. Use the VAT calculator for standard-rate amounts.
Official guidance · Read the GOV.UK guidance