Key takeaways
- 'Plus VAT' means the price shown excludes VAT, so you pay the price plus 20% at the standard rate: £100 plus VAT costs £120.
- To find the total, multiply a plus-VAT price by 1.2 at 20%, or by 1.05 at the 5% reduced rate.
- To find the VAT inside a VAT-inclusive total at 20%, divide the total by 6: £150 including VAT contains £25 of VAT.
- HMRC's VAT fraction is the rate divided by 100 plus the rate, which is 1/6 at 20% and 1/21 at 5%.
- Advertising rules from the ASA say prices aimed at consumers should include VAT; 'plus VAT' prices are for business buyers.
- A VAT-registered business can usually reclaim the VAT it pays, so for it the real cost of £100 plus VAT is £100.
- The VAT registration threshold is £90,000 of taxable turnover in 12 months, and only registered businesses can charge VAT.
“Plus VAT” means the price you have been quoted does not include VAT, so VAT is added on top. At the standard rate of 20%, a £100 plus VAT invoice costs you £120 in total. If you are VAT registered you can usually reclaim the £20, so your real cost stays at £100.
What does “plus VAT” mean?
“Plus VAT” (often written ”+ VAT” or “ex VAT”) means the figure is the net price, before VAT. The supplier will add VAT at the correct rate when it invoices you. The opposite is “inc VAT”, which means VAT is already in the price.
There are three main VAT rates on GOV.UK:
| Rate | VAT added | Examples |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Home energy, children’s car seats |
| Zero | 0% | Most food, children’s clothes |
Most “plus VAT” quotes you see from builders, consultants, software firms and wholesalers are at the standard 20% rate. Our VAT rates and exemptions guide lists what falls where.
How do you work out the total from a plus-VAT price?
Multiply the plus-VAT price by 1.2 at the standard rate, or by 1.05 at the reduced rate. That gives the amount you will actually pay.
- Take the net price, for example £1,250.
- Work out the VAT: £1,250 × 20% = £250.
- Add it on: £1,250 + £250 = £1,500.
- Shortcut: £1,250 × 1.2 = £1,500.
| Price plus VAT | VAT at 20% | Total you pay |
|---|---|---|
| £50 | £10 | £60 |
| £100 | £20 | £120 |
| £450 | £90 | £540 |
| £1,250 | £250 | £1,500 |
| £5,000 | £1,000 | £6,000 |
At 5%, £800 plus VAT costs £840. Use our VAT calculator to add or remove VAT at any rate.
How do you find the VAT in a price that includes it?
Divide a VAT-inclusive price by 6 to find the VAT at 20%. HMRC calls this the VAT fraction, which VAT Notice 700 (section 7.3.1) defines as the rate of tax divided by 100 plus the rate of tax.
- At 20%: 20 ÷ 120 = 1/6. A £150 total includes £25 of VAT and a net price of £125.
- At 5%: 5 ÷ 105 = 1/21. A £210 total includes £10 of VAT.
A common mistake is to take 20% off the total. £150 less 20% is £120, which is wrong; the net price is £125. Divide by 1.2 to get back to the net figure. Our guide to net vs gross explains the terms.
Who actually pays the VAT?
The final consumer bears the VAT, while VAT-registered businesses usually pass it along. How much “plus VAT” really costs depends on who you are.
- If you are VAT registered, you pay the full total to the supplier, then reclaim the VAT as input tax on your VAT return. Your true cost is the net price, provided the purchase is for your business and you hold a valid VAT invoice.
- If you are not VAT registered, you cannot reclaim anything. Your cost is the full VAT-inclusive total.
- If you are a consumer, you pay the full total.
- If you use the Flat Rate Scheme, you generally cannot reclaim VAT on purchases, except some capital items over £2,000. See our Flat Rate Scheme guide.
Some purchases are blocked from reclaim whatever your status, such as business entertainment of clients. Our guide to reclaiming VAT on business expenses covers the exceptions.
Can a business quote prices “plus VAT” to the public?
Usually not. The Advertising Standards Authority’s guidance on VAT in prices, updated 11 December 2025, says prices in ads aimed at consumers should include VAT. A VAT-exclusive price with a note that VAT is payable is not enough.
The rules depend on the audience:
- Consumers only: show the VAT-inclusive price.
- VAT-registered businesses only: a VAT-exclusive price is likely acceptable if it is clearly a trade price, for example “Business price: £120 + VAT@20%”.
- Mixed audience: show the VAT-inclusive price at least as prominently, and state the VAT rate or amount next to any ex-VAT price. “Ex. VAT” on its own is not sufficient, according to the ASA.
What if a quote does not mention VAT at all?
If a price is agreed without any mention of VAT, it may be treated as including VAT. Notice 700 section 7.3 says that where the amount paid is money, “the amount paid includes tax”. That means a supplier who forgets to add VAT may have to account for it out of the price agreed.
Only VAT-registered businesses can charge VAT. You must register once your taxable turnover goes over £90,000 in a rolling 12 months, according to GOV.UK’s registration rules. A supplier below the threshold who has not registered voluntarily should not add VAT. If you are unsure, check their VAT number appears on the invoice.
What to do now
- Check the rate. Confirm whether the quote is at 20%, 5% or 0% before you budget.
- Budget for the gross figure. Even if you reclaim the VAT, you pay it to the supplier first, which affects cash flow.
- Ask for a VAT invoice. You need one to reclaim the VAT.
- Get quotes on the same basis. Compare suppliers either all ex VAT or all inc VAT.
Frequently asked questions
What is £100 plus VAT?
At the standard rate of 20%, £100 plus VAT is £120 in total. At the reduced rate of 5%, it is £105.
How do I take VAT off a price?
Divide the VAT-inclusive price by 1.2 to get the net price at 20%. For example, £240 ÷ 1.2 = £200, so the VAT is £40.
What does ex VAT mean?
Ex VAT means excluding VAT, the same as “plus VAT”. VAT will be added on top of the price shown.
Do I pay VAT if I am not VAT registered?
Yes. You pay the full VAT-inclusive price to a VAT-registered supplier, but you cannot reclaim the VAT, so it is a real cost to you.
Can a supplier add VAT to an agreed price later?
If the price was agreed without mentioning VAT, it may be treated as VAT-inclusive under HMRC’s rules. Check your contract or quote, and agree the VAT basis in writing before work starts.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.