Want to know how much VAT you’re paying? Here’s how to work it out
If you run a VAT registered business you will get bills that show a VAT inclusive price. You need to know how much VAT is in that price so you can reclaim it on your next VAT return. Here’s how you do it:
Let’s work with a nice round figure: £100.
The current VAT rate (November 2010) is 15%. So you multiply £100 by 15 and divide it by 115… Eek! big numbers. It’s easier, you multiply it by 3 and divide by 23.
100 x 3 = 300
300 ÷ 23 = 13.0434
The VAT in £100 is £13.04.
The VAT rate goes up on 1 January 2010, so here’s how it works from then. Same method just different numbers:
100 x 7 = 700
700 ÷ 47 = 14.8936
The VAT in £100 is £14.89 when the VAT rate is 17.5%
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