Tax calculation errors are among the most costly accounting mistakes for small businesses. Overcharging creates disputes. Undercharging means personally absorbing the liability.
Adding Tax to a Net Price
Gross = Net x (1 + Rate/100). At 20% UK VAT: £100 net becomes £100 x 1.20 = £120 gross. The customer pays £120 and you remit £20 to HMRC. Standard for B2B pricing where clients reclaim VAT.
Extracting Tax from a Gross Price
Net = Gross / (1 + Rate/100). At 20% UK VAT: £120 retail contains £120 / 1.20 = £100 net and £20 VAT. Use for retail B2C pricing where the displayed price includes tax.
VAT and GST Rates by Country 2025
UK: 20% standard, 5% reduced, 0% zero-rated (food, books, children's clothing). EU range: 17% (Luxembourg) to 27% (Hungary). Germany 19%, France 20%, Italy 22%. Australia GST: flat 10%. US: no federal rate — state rates 0% to 9%+ combined.
The Percentage Calculator handles both tax directions. Use Increase by % to add tax, and X is what % of Y to find the tax component of a gross price.