How to Remove VAT from a Price (Reverse VAT Calculation Explained)
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Try VAT Calculator FreeRemoving VAT from a price means dividing the VAT-inclusive total by one plus the VAT rate, not subtracting the flat percentage from the total. At 15% VAT, that means dividing by 1.15 to isolate the net price, then subtracting that from the gross figure to find the tax amount. This calculation matters most when you've only been given a final price and need to work out how much of it is actually tax.
Key takeaways
- To remove VAT from a price: divide the VAT-inclusive total by (1 + the VAT rate) to get the net price.
- You cannot just subtract the flat VAT percentage from the gross total. That gives the wrong net figure.
- This calculation is most useful when you've been given a total price and need to know how much of it is tax.
- Reverse VAT calculations come up constantly when checking supplier invoices or converting a client's "all-in" budget into a net working figure.
The Reverse VAT Formula
To extract VAT from a gross (tax-inclusive) price: divide the gross amount by 1 plus the VAT rate as a decimal. At 15% VAT, divide by 1.15. The result is the net price; subtract that from the gross to get the VAT amount.
Why You Can't Just Subtract the Percentage
A common mistake is taking 15% of the gross total and subtracting that from the gross figure. That overstates the VAT amount, because the 15% rate applies to the net price, which is a smaller number than the gross total it's baked into.
| Gross price | VAT rate | Net price | VAT amount |
|---|---|---|---|
| 115.00 | 15% | 100.00 | 15.00 |
| 120.00 | 20% | 100.00 | 20.00 |
| 262.50 | 5% | 250.00 | 12.50 |
| 877.50 | 12.5% | 780.00 | 97.50 |
When This Calculation Comes Up
- Checking a supplier invoice: confirming the net cost and VAT amount match what was quoted.
- Working from a client budget: converting an "all-in, tax included" figure into the net amount you actually have to work with.
- Bookkeeping and returns: separating net sales from VAT collected for tax filing purposes.
A free VAT calculator with a built-in "extract tax from price" mode does this division automatically, which is worth using any time the arithmetic needs to be exactly right rather than approximately right.
Frequently asked questions
What is the formula for removing VAT from a price?
Divide the VAT-inclusive price by 1 plus the VAT rate as a decimal (e.g. 1.15 for 15%) to get the net price.
Can I just subtract the VAT percentage from the total?
No, that overstates the tax amount because the percentage applies to the net price, not the gross total you're starting from.
Why would I need to reverse-calculate VAT?
Most often to check a supplier invoice, convert a client's all-in budget into a working net figure, or separate sales from tax collected for bookkeeping.
Does the reverse formula change for different VAT rates?
The method stays the same (divide by 1 plus the rate as a decimal). Only the specific number you divide by changes with the rate.
How do I subtract 15% VAT from a price?
Divide the VAT-inclusive price by 1.15 to get the net price, then subtract that net figure from the original total to find the VAT amount. Don't just subtract 15% of the total directly.
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