'Gross' includes VAT (or is before deductions); 'net' is after VAT (or after deductions). This guide clears up the difference across VAT, pay and profit.
Published July 2026 · Updated July 2026
Gross is the bigger, all in figure; net is the amount left after something is taken off. What is taken off depends on context, VAT, tax, or other deductions.
For VAT, the net price is before tax and the gross price includes 20% VAT. To add VAT, multiply the net by 1.2; to strip VAT out of a gross figure, divide by 1.2.
In payroll, gross pay is before deductions and net pay is take home. In profit, gross profit is before overheads and net profit is after. Same idea, different setting.
Divide by 1.2 for the 20% rate. The difference between gross and net is the VAT. Our VAT calculator does this instantly.
Yes, gross is the total before deductions, so it is always the larger of the two.
Because the price given is net; VAT is added on top to reach the gross amount the customer pays.
Source: GOV.UK ↗. This glossary is written for small business owners, so definitions are simplified. Tax rates and thresholds reflect 2026/27 UK rules and change over time. Berified does not provide accounting, tax or legal advice; always check the source or a qualified adviser.