This calculator shows what percentage of a VAT-inclusive total is actually VAT. It is especially useful when analysing receipts, invoices, and ecommerce payouts where prices already include tax.
One of the most common mistakes is assuming that VAT is the same percentage of the total as the VAT rate. For example, many people think 20% VAT means 20% of the total price is tax — but this is incorrect. The real proportion is lower because VAT is calculated on the net value first.
Understanding this difference is essential for accurate financial analysis, pricing strategy, and profit calculations.
The result shows the true percentage of a total price that represents VAT. This allows you to correctly interpret VAT-inclusive figures.
For example, at a 20% VAT rate, the tax portion is approximately 16.67% of the total — not 20%. This difference is crucial when analysing revenue and profitability.
VAT % of total = (rate ÷ (100 + rate)) × 100
This formula converts the VAT rate into its equivalent proportion of the total price by reversing how VAT is applied.
This calculation is extremely important for businesses working with VAT-inclusive pricing. If you assume VAT is the same percentage of the total as the rate, you will overestimate how much of your revenue is tax.
For example, if you receive £120 at 20% VAT, the tax portion is £20 — which is only 16.67% of the total. The remaining £100 is your actual revenue.
Understanding this helps you analyse margins correctly, validate invoices, and avoid financial misinterpretation when working with VAT-inclusive prices.
Example 1:
20% VAT → VAT is 16.67% of total
Example 2:
5% VAT → VAT is approximately 4.76% of total
Example 3:
£120 total → £20 VAT → 16.67% of total
Use rate ÷ (100 + rate) × 100.
No, it is approximately 16.67% of total.
Because it is calculated on the net amount before being added.