A percentage is a ratio expressed as a fraction of 100. The word comes from the Latin per centum — "by the hundred." Percentages are used everywhere: discounts, tax rates, interest rates, exam scores, statistical data, and financial returns all use percentage notation because it provides a consistent, comparable scale regardless of the underlying quantities.
The Four Core Percentage Problems
| Question | Formula | Example |
|---|---|---|
| What is X% of Y? | Result = (X ÷ 100) × Y | 15% of £80 = £12 |
| X is what % of Y? | Result = (X ÷ Y) × 100 | 30 is 60% of 50 |
| % increase from X to Y | ((Y − X) ÷ X) × 100 | 50→65 = 30% increase |
| % decrease from X to Y | ((X − Y) ÷ X) × 100 | 100→75 = 25% decrease |
Common Real-World Uses
- Retail discounts: A 30% discount on a £120 item = £120 × 0.30 = £36 off. Sale price = £84.
- VAT / Sales tax: Adding 20% VAT to £50: £50 × 1.20 = £60. Removing VAT from £60: £60 ÷ 1.20 = £50.
- Exam scores: 72 correct out of 90 questions = (72 ÷ 90) × 100 = 80%.
- Investment returns: Portfolio grew from £8,000 to £9,200. Return = ((9,200 − 8,000) ÷ 8,000) × 100 = 15%.
- Tip calculation: 18% tip on a £45 meal = £45 × 0.18 = £8.10 tip. Total = £53.10.
Percentage Points vs Percentages — An Important Distinction
A change from 20% to 25% is a 5 percentage point increase, but a 25% relative increase. This distinction matters in finance and statistics: if a central bank raises rates from 2% to 3%, that is a 1 percentage point increase (or a 50% increase relative to the original rate). Always check whether a reported change is in percentage points or relative percent.