Adding 20% VAT to a £1,000 Invoice

See exactly how 20% UK VAT applies to a £1,000 net invoice — the £200 VAT amount and the £1,200 gross total — plus how to reverse it out of a VAT-inclusive price.

Written by Anurag Rath · Reviewed by the thecalcu.com team · Last updated 28 August 2026

VAT Amount

£200

Open this scenario in VAT Calculator

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Adding 20% to a round £1,000 is the clearest way to see how UK VAT works on an invoice, and how reversing it out of a gross figure is not the same sum.

The Scenario

Amount: £1,000
VAT rate: 20%
Mode: Add VAT (net to gross)

The result above is produced by the VAT Calculator, which treats the entered amount as the net price and applies the rate directly, so the VAT amount and gross total are its real output.

What This Means

Adding VAT is simple: £1,000 net becomes £1,200 gross, with £200 of that being tax you collect and pass to HMRC. The trap is going the other way. If someone hands you a £1,200 VAT-inclusive total, the VAT inside it is not £240. You divide by 1.20 to recover the £1,000 net, leaving £200 of VAT. For a VAT-registered business the net figure is usually what counts, since the customer reclaims the VAT, but for consumer pricing the gross total is what the buyer actually sees and pays.

Try Your Own Numbers

Enter your own amount and rate in the VAT Calculator, and flip between add and remove mode depending on whether you are building a price up or breaking one down. The Discount Calculator is handy alongside it when you are quoting a net price after a discount and then adding VAT.

Frequently Asked Questions

Why is the VAT exactly £200?

In add mode the £1,000 is treated as the net, pre-VAT price, and VAT is 20% of that. 20% of £1,000 is £200, giving a gross total of £1,200. The calculation is a straight percentage with no thresholds involved.

How do I work out the VAT already inside a £1,200 price?

Switch the calculator to remove mode. It divides the gross price by 1.20 to get the £1,000 net figure, and the difference is the £200 of VAT. This is the VAT fraction method, and it is why you cannot just take 20% of a VAT-inclusive total.

Which VAT rate should I use?

The UK standard rate is 20% and applies to most goods and services. A reduced rate of 5% covers things like domestic energy, and some items such as most food and children's clothing are zero-rated. Enter whichever rate applies to what you are selling.

Do I charge VAT if I am not VAT registered?

No. You only add VAT to your invoices once you are registered, which is compulsory above the registration threshold and optional below it. An unregistered business invoices at the net price with no VAT line.

Does this work for EU or other countries?

Yes, the maths is the same anywhere VAT or a similar value-added tax applies, you just change the rate. Ireland's standard rate is 23%, Germany's is 19%, and so on. For India's GST, use the dedicated GST calculator instead.

How does VAT affect my pricing and margin?

If your customers are consumers, the VAT is a real cost to them and affects how your headline price looks. If they are VAT-registered businesses, they reclaim it, so the net price is what matters. Model the margin side with the [Profit and Loss Calculator](/profit-loss-calculator/).