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Money & Finance · Lesson 10 of 14

Tax on a Price: A Worked Percentage Example

A sales tax adds a percentage to the price. Multiply by 1.2 to add 20%, and divide by 1.2 to go back.

What you will learn

  • Add a percentage tax to a price.
  • Find the tax amount.
  • Work back to the price before tax.

Before you start: you should be able to find a percentage of an amount and use decimal multipliers. See Percentage Increase and Decrease.

The idea

A sales tax is a percentage added to a price. The rates in this lesson are made-up examples. Real tax rules change, so always check the current rules where you live.

In our example the tax is 20%20\%. For a £50 item the tax is 20%20\% of £50, which is £10, so the total is £60.

Bar chart: Price 50, Tax 10, Total 60Bar chart: Price 50, Tax 10, Total 60. The scale goes from 0 to 60 in steps of 20.0204060PriceTaxTotalPartPounds
A £50 price with 20% tax added. The tax is £10 and the total is £60.

The quick way

To add 20%20\%, multiply by 1.21.2. To go back from a price that includes tax, divide by 1.21.2.

Sorted into groups: Before tax, Tax (20%), TotalBefore tax: £35, £50, £80. Tax (20%): £7, £10, £16. Total: £42, £60, £96.Before tax£35£50£80Tax (20%)£7£10£16Total£42£60£96
The tax is a fifth of the price. The total is the price plus the tax.

Working backwards

If the price including 20%20\% tax is £48, the price before tax is 48÷1.2=4048 \div 1.2 = 40. Do not subtract 20%20\% of £48, because the tax was 20%20\% of the smaller price.

Worked examples

Example 1: Adding tax

Add 20%20\% tax to £35.

  1. 35×1.2=4235 \times 1.2 = 42.

Answer: £42

Example 2: Tax amount

5%5\% tax on £200.

  1. 200×0.05=10200 \times 0.05 = 10.

Answer: £10

Example 3: Backwards

Price with 20%20\% tax is £48.

  1. Divide by 1.21.2: 48÷1.2=4048 \div 1.2 = 40.

Answer: £40 before tax

Tip: to undo a percentage increase, divide by the multiplier. Do not just subtract the percentage.

Why it matters

Tax appears on receipts, bills and online checkouts. Knowing how to add it and take it off lets you compare real prices. This lesson uses invented rates only.

Practice

Your turn. Type or choose an answer, then press Check. Getting one wrong is fine, that is what practice is for. You can try as many times as you like.

Question 1 of 8

A sales tax of 20%20\% is added to £50. How many pounds is the tax?

Question 2 of 8

A £35 item has 20%20\% tax added. What is the total in pounds?

Question 3 of 8

A price including 20%20\% tax is £48. What was the price before tax in pounds?

Question 4 of 8

A tax of 20%20\% is added to £12.50. How many pounds is the tax?

Question 5 of 8

A £80 item has 20%20\% tax added. What is the total in pounds?

Question 6 of 8

A tax of 5%5\% is added to £200. How many pounds is the tax?

Question 7 of 8

Price with tax is £60 at 20%20\%. How many pounds of it is tax?

Question 8 of 8

Which number do you multiply by to add 20%20\%?

Choose one answer