Summer VAT Calculator
The maths

Why "subtract 15%" is wrong

The rate drops by 15 percentage points — but that's not 15% off the till price. Here's the full working, with a worked example you can paste into a calculator.

  1. 1

    The tempting shortcut

    The rate drops from 20% to 5% — 15 percentage points. So some people take 15% off the price they see on the till.

  2. 2

    What that gives you (wrong)

    £120 × 0.85 = £102 — too low. The right shortcut is 12.5% off: £120 × 0.875 = £105.

  3. 3

    Why 15% is the wrong number

    VAT is charged on the net price, not as a slice of the total. £120 is £100 net + £20 VAT. Taking 15 percentage points off the rate is not the same as 15% off the price.

  4. 4

    The correct method

    Strip the 20% VAT first: £120 ÷ 1.20 = £100. Add 5% VAT: £100 × 1.05 = £105. Summer price £105, saving £15.

  5. 5

    Or one multiplication

    Take 12.5% off — multiply by 0.875. Because 1.05 ÷ 1.20 = 0.875.

  6. 6

    Where 15 does come in

    The saving is 15% of the net price. Quick refund check: price × 15 ÷ 120 (e.g. £120 → £15).

On a receipt

HMRC rounds VAT to the nearest penny per line (VATREC12030). The calculator on the home page applies the same rounding, so the net, VAT and gross figures match what a compliant till would print.

Try it for yourself

Open the web calculator and enter £120 with the "Includes VAT" basis selected and a qualifying category — the summer price will read £105.00, with a £15.00 customer saving.