Two formulas, one common mistake, and the VAT fractions accountants use to check any invoice in seconds.
VAT = Net × rate and Gross = Net × (1 + rate). £500 + 20% VAT = £500 × 1.2 = £600.
Net = Gross ÷ (1 + rate). £600 ÷ 1.2 = £500, so VAT is £100. Subtracting 20% of £600 (£120) is the classic mistake — it removes too much because VAT was calculated on the net, not the gross.
| Rate | Fraction of gross that is VAT | Countries |
|---|---|---|
| 5% | 1/21 | UAE, UK reduced |
| 9% | 9/109 | Singapore GST |
| 15% | 3/23 | Saudi Arabia, South Africa |
| 20% | 1/6 | UK, France |
Businesses collect output VAT on sales and reclaim input VAT on purchases. The return settles the difference. Keeping VAT per invoice line, not per total, avoids rounding disputes.
Country calculators: UK, UAE, Saudi Arabia, Singapore GST.
