What is net price?
Net price is the price before VAT, tax, fees or other additions are included. In UK VAT sums, it usually means the VAT-exclusive amount.
Net price is the price before VAT or other additions are added. If a price is described as VAT-exclusive, the net price is the amount before VAT is included.
In everyday maths, net price is often compared with gross price. Gross price is the final total after VAT has been added; net price is the base amount used to calculate the VAT.
Why net price matters
Net price matters because it shows the amount before VAT is added. On quotes, invoices and business purchases, confusing net and gross prices can lead to wrong totals, incorrect VAT amounts or unfair comparisons between suppliers.
Net price vs gross price
The simplest way to remember the difference is this: net is before VAT, gross is after VAT.
| Term | What it means | Example at 20% VAT |
|---|---|---|
| Net price | Price before VAT is added | £100 |
| VAT amount | The VAT calculated from the net price | £20 |
| Gross price | Final VAT-inclusive price | £120 |
If a quote says £100 + VAT, £100 is the net price and £120 is the final total at 20% VAT.
Net price formula
To calculate net price from a VAT-inclusive gross price, divide the gross price by one plus the VAT rate.
Net price = gross price ÷ (1 + VAT rate)
At 20% VAT:
Net price = gross price ÷ 1.20For example, if the gross price is £300 and VAT is 20%, the net price is £300 ÷ 1.20 = £250.
Need the exact VAT breakdown?
Use the VAT calculator to add or remove VAT and see the net, VAT and gross amounts separately.
How to find the gross price from a net price
If you already have the net price and want to add VAT, multiply by the VAT multiplier. At the UK standard rate of 20%, the multiplier is 1.20.
Gross price = net price × (1 + VAT rate)
VAT amount = gross price − net price
At 20% VAT:
Gross price = net price × 1.20Net price and UK VAT rates
The standard UK VAT rate is 20%, with reduced and zero rates applying to some goods and services. The correct rate depends on what is being sold, so business users should check the relevant VAT treatment rather than assuming every item uses 20%.
| VAT rate | Gross-to-net divisor | Example from £120 gross |
|---|---|---|
| 20% | ÷ 1.20 | £100 net |
| 5% | ÷ 1.05 | £114.29 net |
| 0% | ÷ 1.00 | £120 net |
Common uses of net price
- Checking the VAT-exclusive amount on an invoice or quote.
- Adding VAT to a product or service price.
- Comparing a VAT-exclusive supplier quote with a VAT-inclusive one.
- Finding the pre-VAT price from a receipt total.
- Separating a final customer price into net price and VAT amount.
Net price FAQs
Is net price before or after VAT?
Net price is before VAT. Gross price is after VAT has been added.
How do you calculate net price at 20% VAT?
Divide the VAT-inclusive gross price by 1.20. For example, £120 ÷ 1.20 = £100 net.
Is net price the same as VAT-exclusive price?
In most VAT calculations, yes. A VAT-exclusive price is the amount before VAT is added.
How do you add VAT to a net price?
Multiply by the VAT multiplier. At 20% VAT, multiply the net price by 1.20.