How to Remove VAT or GST From a Price (and the 20% Mistake)

You have a receipt for £120 that includes 20% VAT, and you need the price before VAT. The quick answer most people reach for is to take 20% off: £120 − £24 = £96. It's wrong. The price before VAT is £100, and the VAT is £20.

The 20% was added to the price before tax, not taken from the price after it. Undoing it needs a division, not a subtraction. This guide shows the method, a shortcut that tax authorities use themselves, and how it works with the rates in the UK, Australia and Canada. The VAT Calculator and GST Calculator do the same sums for you.

The method in three steps

1. Turn the rate into a multiplier: 1 + the rate as a decimal. At 20% that's 1.20.
2. Divide the tax-inclusive price by it: £120 ÷ 1.20 = £100. That's the price before tax.
3. Subtract to find the tax: £120 − £100 = £20.

Check it by going forwards: £100 plus 20% is £100 + £20 = £120. If your answer doesn't take you back to the price you started with, something's wrong.

Why does subtracting fail? Because the 20% was worked out on £100, not on £120. Taking 20% of £120 uses a bigger base, so it removes too much: £24 instead of £20. The higher the rate, the bigger the error.

The shortcut: tax fractions

If you only need the tax amount, there's a quicker route. HMRC calls it the VAT fraction and defines it as the rate divided by (100 + the rate). The same idea works for any VAT or GST rate:

• At 20%: 20 ÷ 120 = 1/6. The VAT in £120 is £120 ÷ 6 = £20.
• At 5%: 5 ÷ 105 = 1/21. The VAT in £105 is £105 ÷ 21 = £5.
• At 10%: 10 ÷ 110 = 1/11. The GST in A$110 is A$110 ÷ 11 = A$10.

The fraction is the tax share of the tax-inclusive price. Multiply the tax-inclusive price by it to get the tax, and subtract that to get the price before tax.

Worked examples by country

The rates below come from the official sources listed at the end of this guide. Rates can change, so check the current rate before you rely on one.

The UK also has a 0% rate. Items charged at 0% contain no VAT, so there's nothing to remove.

Two cases this guide doesn't cover. British Columbia, Manitoba, Saskatchewan and Quebec charge a separate provincial sales tax alongside the 5% GST, and each province sets its own rules for it. US sales tax works differently from VAT and GST and isn't covered here either.

Receipts with more than one rate

A single receipt can mix items taxed at different rates. In the UK, for example, a shop receipt might include items at 20% and items at 0%. Applying the tax fraction to the total then gives the wrong answer.

Example: a £30.00 receipt is made up of £18.00 of items at 0% and £12.00 of items at 20%.

• Wrong: £30.00 ÷ 6 = £5.00 of VAT.
• Right: only the £12.00 carries VAT, so the VAT is £12.00 ÷ 6 = £2.00, and the total before VAT is £28.00.

Most VAT receipts mark which lines are at which rate, or show a summary by rate at the bottom. Work out each rate's share separately, then add the results.

Rounding: why your total can be a penny out

Removing tax rarely produces whole pennies or cents. Three items each priced at £9.99 including 20% VAT show the problem:

• Per line: £9.99 ÷ 6 = £1.665, which rounds to £1.67. Three lines give £5.01 of VAT.
• On the total: £29.97 ÷ 6 = £4.995, which rounds to £5.00.

Neither calculation is "wrong" as arithmetic; they just round at different points. Tax authorities set rules on how invoices may be rounded, and they differ from country to country, so if you issue invoices, follow the guidance from your own tax authority rather than picking a method yourself.

Common mistakes at a glance

The last mistake matters for anyone setting prices. Our guide on markup vs margin shows how to price to a target margin once the tax is out of the way, and the Percentage Calculator helps with any other percentage checks.

A quick way to remember it

Adding tax multiplies, so removing it divides. If you ever find yourself taking a percentage off a tax-inclusive price, stop and divide instead.

Last reviewed: 11 October 2026. Tax rates were checked against the official sources below on that date. This guide explains the arithmetic; it isn't tax advice, and whether VAT or GST applies to a particular sale depends on the rules in your country.