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 Value Added Tax, (VAT).
Calculator guide

 
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How to add VAT (Value Added Tax) to a price
- (17.5%, 20% and 15%)

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)

20% (from Jan 4th 2011)

If we assume that VAT is at a rate of 20%...

Net price

multiplied by

1.2

= Gross price

Price before tax

multiplied by

1.2

= Price after tax

VAT Fluctuations

17.5% (from Jan 1st 2010 - to Jan 4th 2011)

If we assume that VAT is at a rate of 17.5%...

Net price

multiplied by

1.175

= Gross price

Price before tax

multiplied by

1.175

= Price after tax

More about the 2010 June Budget

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

If we assume that VAT is at a rate of 15%...

Net price

multiplied by

1.15

= Gross price

Price before tax

multiplied by

1.15

= Price after tax

or in fractional form

Price before tax

multiplied by

23/20

= Price after tax

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

So now let's assume that a tax is at a new rate of 15%...

First, get the multiplier :
15 100 = 0.15
0.15 + 1 = 1.15

The multiplier is 1.15

So...

Net price

multiplied by

1.15

= Gross price

Price before tax

multiplied by

1.15

= Price after tax

E.g :

     

£100

multiplied by

1.15

= £115

£100 + Tax

 

= £115 inc Tax

Working with The 2009 Temporary Rate of 15% VAT

Chancellor Alistair Darling introduced a temporary, lower, VAT rate in his pre-budget report announced on 24th Nov 2008. The temporary tax rate applied from 1st December 2008, running throughout 2009 up to January 1st 2010.

The chancellor confirmed during his 2009 Pre-Budget report (on Dec 9th 2009), that the old rate of 17.5% would 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.



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