Bills and Invoices

Subscribe to keep learning

You’ve seen the first part of this lesson for free. Log in and subscribe to unlock the rest, plus every other lesson, worksheet and checkpoint paper.

See Plans →

Reading Utility Bills

A utility bill (electricity, gas, water) is usually made up of two parts:

Standing charge — a fixed fee charged every day (or per quarter) regardless of how much you use.

Unit charge — you pay for every unit of energy or water you use, multiplied by the unit rate.

Total Bill = Standing Charge + (Units Used × Unit Rate)

💡 Worked Example 1 — Electricity Bill

An electricity bill shows: standing charge 28p/day for 91 days, and 342 units used at 14.5p per unit. Find the total bill.

Step 1 — Standing Charge

28p × 91 = 2548p = £25.48

Step 2 — Unit Charge

342 × 14.5p = 4959p = £49.59

Step 3 — Total

£25.48 + £49.59 = £75.07

£25.48 + £49.59 = £75.07

💡 Worked Example 2 — Gas Bill

A gas bill shows: standing charge 30p/day for 90 days, and 156 units used at 6.5p per unit. Find the total bill.

Step 1 — Standing Charge

30p × 90 = 2700p = £27.00

Step 2 — Unit Charge

156 × 6.5p = 1014p = £10.14

Step 3 — Total

£27.00 + £10.14 = £37.14

£27.00 + £10.14 = £37.14

✓ Quick Check 1 — Reading Utility Bills

Question 1 of 10

VAT on Invoices

VAT (Value Added Tax) is a tax charged on most goods and services in the UK, at a standard rate of 20%. VAT works exactly as in Lesson 10.3 — Taxation: Subtotal × 1.20 for the total including VAT, Total ÷ 1.20 to work back to the subtotal. On an invoice, VAT appears as its own line between the subtotal and the total.

💡 Worked Example 1 — Adding VAT to an Invoice

An invoice has a subtotal of £480. Calculate the VAT and the total amount due.

Method 1 — Calculate VAT separately

VAT = 20% of £480 = 0.20 × £480 = £96.00

Total = £480 + £96 = £576.00

Method 2 — Multiply by 1.20

Total = £480 × 1.20 = £576.00

VAT = £96.00 Total including VAT = £576.00

💡 Worked Example 2 — Removing VAT (Reverse Calculation)

A total invoice is £660 including VAT at 20%. Find the pre-VAT subtotal and the VAT amount.

Step 1 — Divide by 1.20 to reverse the VAT

Pre-VAT price = £660 ÷ 1.20 = £550.00

Step 2 — Find the VAT amount

VAT = £660 − £550 = £110.00

Pre-VAT = £550.00 VAT = £110.00 Total = £660.00

Check: £550 × 1.20 = £660 ✓

✓ Quick Check 2 — VAT on Invoices

Question 1 of 10

Varied Bills and Checking for Errors

Not all bills follow the same format. Phone bills, water rates, and council tax all have different structures. A key skill is checking the arithmetic yourself — errors do occur and you may be overcharged.

To check a bill: add up each component yourself and compare your total to the amount shown on the bill.

Always check your bill: Add up each line yourself. If your total differs from the bill, contact the supplier to query it. £18.00 + £7.35 + £8.99 = £34.34, not £35.34. The bill is £1.00 too high.

💡 Worked Example 1 — Council Tax Instalments

Council tax is £1,560 per year, paid in 10 equal monthly instalments. What is each instalment?

Step 1 — Divide annual amount by number of instalments

£1,560 ÷ 10 = £156.00 per month

Annual total ÷ number of instalments = £1,560 ÷ 10 = £156.00

💡 Worked Example 2 — Water Bill with Multiple Components

A water bill shows: standing charge £12.50; water usage 45 m³ at £1.80/m³; wastewater charge 45 m³ at £1.10/m³. Find the total.

Step 1 — Water usage charge

45 × £1.80 = £81.00

Step 2 — Wastewater charge

45 × £1.10 = £49.50

Step 3 — Total

£12.50 + £81.00 + £49.50 = £143.00

£12.50 + £81.00 + £49.50 = £143.00

💡 Worked Example 3 — Spotting an Error on a Phone Bill

A phone bill shows: line rental £18.00, calls 245 min × 3p = £7.35, data add-on £8.99. Total shown: £35.34. Is this correct?

Step 1 — Calculate the correct total yourself

£18.00 + £7.35 + £8.99 = £34.34

Step 2 — Compare to the bill

Bill shows £35.34. Correct total is £34.34. Error of £1.00 found — the bill is overcharging by £1.00.

Error found: bill shows £35.34 but the correct total is £34.34. Query this with the supplier.

✓ Quick Check 3 — Varied Bills and Error Checking

Question 1 of 10

Practice: Bill Calculations

Work out each answer, type it in, then click Check to see if you are right.

#	Question	Answer	Result
1	VAT on £200 subtotal (20%)
2	Total including VAT on £350
3	Pre-VAT price if total is £180
4	Standing charge: 25p/day × 92 days (in £)
5	Units bill: 280 units × 12.5p (in £)
6	VAT on £150 subtotal (20%)
7	Total including VAT on £80
8	Pre-VAT price if total is £240
9	Standing charge: 30p/day × 90 days (in £)
10	Units bill: 400 units × 15p (in £)

⚠ Things to Watch Out For

Confusing unit costs with total costs: A unit rate (pence per kWh) must be multiplied by the number of units used. The total cost is NOT the unit rate × number of bills.
Adding VAT to a VAT-inclusive price: If a price already includes VAT, do not add VAT again. Check whether the price shown is before or after VAT.
Calculating VAT — wrong base: VAT = 20% of the pre-VAT price (not of the VAT-inclusive price). Always apply VAT to the net amount.
Standing charges: Many bills include a fixed daily or quarterly standing charge. This must be added to the unit cost — don't ignore it.
Reading the invoice total: The invoice total may include sub-totals, VAT, and discounts. Add and subtract each component carefully in the correct order.

What would you like to do next?

Learning Objectives

Real-World Applications

Subscribe to keep learning

💡 Worked Example 1 — Electricity Bill

💡 Worked Example 2 — Gas Bill

💡 Worked Example 1 — Adding VAT to an Invoice

💡 Worked Example 2 — Removing VAT (Reverse Calculation)

💡 Worked Example 1 — Council Tax Instalments

💡 Worked Example 2 — Water Bill with Multiple Components

💡 Worked Example 3 — Spotting an Error on a Phone Bill

Practice: Bill Calculations

⚠ Things to Watch Out For