How to add VAT (Value Added Tax) to a price
- (15% and 17.5%)

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)

15% (from 1st Dec 2008 - Dec 31st 2009 )

17.5% (from Jan 1st 2010)

Other countries and USA states may have different sales tax rates.

Working with other rates of sales tax

In the equation above, 1.175 is the multiplier because we are working with a the UK VAT tax rate of 17.5%.

To get the multiplier for other sales-tax rates, 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

Working with a New Rate of 15% VAT

Chancellor Alistair Darling has introduced a new, lower, VAT rate in his pre-budget report announced on 24th Nov 2008. The new tax rate will apply from 1st December 2008 until the end of 2009.

The chancellor confirmed during his 2009 Pre-Budget report (on Dec 9th 2009), that the old rate of 17.5% will come into effect again on January 1st 2010.

See practical details about this change

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.