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Where Taxpayers and Advisers Meet

How do I calculate the VAT element?

Deathwing
Posts: 3
Joined: Fri Aug 07, 2015 7:43 pm

How do I calculate the VAT element?

Postby Deathwing » Fri Aug 07, 2015 7:45 pm

I hate accounts and now my business has hit the VAT threshold (a double-edged sword) I hate accounts even more! I've got a spreadsheet that works out prices but I'm not sure how to calculate the VAT.

For example, if the price inclusive of VAT to the customer is £250, to work out the VAT element do I multiply by 0.2 or do I divide by 1.2? Both seem to give different answers!

Thanks!

nikkisizer
Posts: 342
Joined: Fri Nov 04, 2011 5:26 pm
Contact:

Re: How do I calculate the VAT element?

Postby nikkisizer » Sat Aug 08, 2015 6:33 am

Hello Deathwing,

Dividing by 1.2 will give you the net amount from which you can then determine the VAT element.
Kind regards,

Nikki Sizer

Sizer & Co Accountants
nikki@sizeraccountants.com
[url]http://www.sizeraccountants.com[/url]

Birmingham - London - Manchester - Leeds

Deathwing
Posts: 3
Joined: Fri Aug 07, 2015 7:43 pm

Re: How do I calculate the VAT element?

Postby Deathwing » Sat Aug 08, 2015 9:56 am

Thanks so if the price inclusive of VAT is £250

Then divide that by 1.2 and the price less VAT is £208.33

Which means the VAT is £41.67 right?

nikkisizer
Posts: 342
Joined: Fri Nov 04, 2011 5:26 pm
Contact:

Re: How do I calculate the VAT element?

Postby nikkisizer » Sat Aug 08, 2015 9:59 am

Yes that is correct.
Kind regards,

Nikki Sizer

Sizer & Co Accountants
nikki@sizeraccountants.com
[url]http://www.sizeraccountants.com[/url]

Birmingham - London - Manchester - Leeds

Deathwing
Posts: 3
Joined: Fri Aug 07, 2015 7:43 pm

Re: How do I calculate the VAT element?

Postby Deathwing » Sat Aug 08, 2015 10:43 am

Thank you!

nikkisizer
Posts: 342
Joined: Fri Nov 04, 2011 5:26 pm
Contact:

Re: How do I calculate the VAT element?

Postby nikkisizer » Sat Aug 08, 2015 10:47 am

You are most welcome!
Kind regards,

Nikki Sizer

Sizer & Co Accountants
nikki@sizeraccountants.com
[url]http://www.sizeraccountants.com[/url]

Birmingham - London - Manchester - Leeds

les35
Posts: 583
Joined: Wed Aug 06, 2008 3:09 pm

Re: How do I calculate the VAT element?

Postby les35 » Mon Aug 10, 2015 10:04 am

The technical term for this is the VAT Fraction. When VAT is 20%, the VAT Fraction is 1/6.
But, the arithmetic is the same, of course!


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