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How to add VAT (Value Added Tax) to
a price
This is the calculation you need to use when:
you know a price before tax (the
Net price)
but want to find out the price after
tax (the Gross price).
(click here to see a similar
calculation for deducting tax)
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If we assume that VAT is at a rate of 17.5%...
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Net price
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multiplied by
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1.175
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= Gross
price
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Price before
tax
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multiplied by
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1.175
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= Price
after tax
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In the equation above, 1.175
is the multiplier. To get the multiplier, we need to convert
the tax rate into a fraction by dividing it by 100 and then
add the resulting fraction to 1.
So, if we assume that VAT is at a rate of 17.5%,
we will need to divide 17.5 by 100, giving 0.175, then add 1.
Thus the multiplier is 0.175 +1 = 1.175
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So now let's assume that a tax is at a new rate
of 2.5%...
First, get the multiplier :
2.5 
100 = 0.025
0.025 + 1 = 1.025
The multiplier is 1.025
So...
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Net price
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multiplied by
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1.025
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=
Gross price
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Price before
tax
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multiplied by
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1.025
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= Price
after tax
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E.g :
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£100
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multiplied by
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1.025
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= £102.50
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£100
+ Tax
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= £102.50
inc Tax
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Deducting VAT from a price
Click here to see how
to deduct tax from a price.
Stick it Where the Sun Don't Shine!
If you want to keep a copy of this guide, why not print
it out and stick it onto the noticeboard in your accounts
office.
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