Calculating VAT Amount
Calculating the VAT on NET or Gross amounts is very
easy. Both examples, are calculated with VAT rate at 17.5%. However, if this rate is not appropriate for your specific
calculation, please refer to the Decimal - VAT Fraction Conversion Table,
and update figures accordingly.
Calculating The VAT Amount From Gross Figure
If you are presented with receipts (usually for, but not limited to, the purpose of claiming expenses) and need to calculate the VAT
(at 17.5%) element for a receipt for £50.25:
- £50.25 divided by 1.175
- Multiply the answer by 0.175
This gives you VAT of £7.48
Using VAT Fraction
Mutliply £50.25 by 7/47 (which is commonly referred to as the VAT fraction)
Calculating The VAT Amount From Net Figure
If you have created a sales invoice with a net amount of £42.77 and need to calculate the VAT (at 17.5%) for an invoice for £42.77:
- Multiply 42.77 by 0.175
This gives you VAT of £7.48
Calculating The Gross Amount From Net Figure
Where sales prices are listed excluding VAT and a customer requests the gross amount for a net amount of £42.77, you need to calculate
the net amount with VAT (at 17.5%) included:
- Multiply 42.77 by 1.175
This gives you a gross of £50.25
Settlement Discounts
Note: There are exceptions to calculating the VAT and gross amount when
settlement discounts are used.
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