How to Calculate VAT
Value Added Tax (VAT), also known as Sales Tax and GST outside of the UK is a tax usually paid by the consumer at the point of purchase, the VAT applied is itemised separately from the base price for certain goods and services where the tax amount is usually calculated by applying a percentage rate to the taxable price of a sale.
How to calculate VAT or sales tax is the first question every newly registered business asks themselves. There are many books and websites that can offer you guidance on just how to calculate VAT or sales tax but the easiest and quickest method by far will be to download the iPhone Selling Price Calculator App and hey presto its always in your pocket, wherever and whenever you need it.
There are however two ways to manually calculate the amount something will cost when VAT has been added. The current normal rate of VAT in the United Kingdom is 20%. Lets assume that an item costs £40.00 excluding VAT and the VAT rate is 20%.
VAT Calculations – How much VAT to apply
Method 1
( [VAT Rate] / 100 ) * [Original Price] = [Amount of VAT Payable]
for example
( 20 / 100 ) * 40 = 8 to get the final price add £8 to £40 to get £48
Method 2
The second method calculates the final value in one step
( ( [VAT Rate] + 100 ) / 100 ) * [Original Price] = [Total Price Including VAT]
for example
( ( 20 + 100 ) / 100 ) * 40 = 48
VAT Calculations – How much VAT has been applied
Need to work out how much VAT has been applied to a price? This is the calculation you need
( 100 / ( 100 + [VAT Rate] ) * [Final Price] = [Pre-VAT Price] then [Final Price] – [Pre VAT Price] = VAT Applied
for example
( 100 / ( 100 + [20] ) ) * [£48] = £40
then
£48 – £40 = £8 (VAT Applied)
So now you know how to work out VAT so it can be applied and also the VAT that has already been applied. But with todays technology why do you need to know all this? why not let the Selling Price Calculator App handle the calculations simply and quickly for you. Buy it now for the iPhone in the App Store.
