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Help with Vat

Pads

By Pads
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Pads Newbie

Pads

Posted
Posted
Im trying to calulate how much vat I have paid on work... looking at a number of calulators on line it gives 2 answers

say for eg 17.5 % of 1000 you would think is 175.

http://www.crazysquirrel.com/finance/vat-calculator.jspx

But when done on the calulator I get 148.00 what is the difference

Yes I know maths is not my strong point !!

Many thanks
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cooperlola Newbie

cooperlola

Posted
Posted

Like Pads, Maths is not my strong point and %s leave me cold.  However, I have got better at this over the years by working them out in a very simplistic fashion which will no doubt leave talented mathematicians cold!

A % is a hundredth of something.  Thus if the amount includes 17.5% VAT, then you have 117.5 bits altogether (the original hundred, plus the VAT.)  So, if you divide the total by 117.5 (I couldn't begin to do this in my head but with a calculator it's easy) then you just need to multiply by 100 to get the initial sum and 17.5 to get the VAT element. 

If the amount doesn't include the VAT then you just divide by 100 and multiply by 117.5 to get the total, or 17.5 to get the VAT element on its own.

I know this sounds dopey and juvenile but it works for me! 

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Gardian Community Regular

Gardian

Posted
Posted
[quote user="cooperlola"]

A % is a hundredth of something.  Thus if the amount includes 17.5% VAT, then you have 117.5 bits altogether (the original hundred, plus the VAT.)  So, if you divide the total by 117.5 (I couldn't begin to do this in my head but with a calculator it's easy) then you just need to multiply by 100 to get the initial sum and 17.5 to get the VAT element. 

If the amount doesn't include the VAT then you just divide by 100 and multiply by 117.5 to get the total, or 17.5 to get the VAT element on its own.

[/quote]

Priceless[:-))] 

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Gluestick Collaborator

Gluestick

Posted
Posted
What seems to confuse people is perspective.

Important to remember that End Use Tax (i.e. VAT, TVA, IVA, Sales Tax in the USA etc) are charged on the whole value of the output.

"Outputs" are  what registered traders sell.

"Inputs" are what they buy.

Outputs are also called, variously "Supplies".

The VAT is not your dosh: it's the government's.

So your own bookeeping is only actually concerned with the difference between your buying and selling prices: VAT is levied on top; and accounted, separately.

So, if a trader supplies goods or services for £1,000.00 or if you like € 1.000,00, this is 100%.

However, VAT must be charged on top.

Thus the actual amount charged and therefore invoiced (assuming VAT is 17.5%) is 117.5%.

Therefore, in order to calculate the VAT element of an amount which is VAT inclusive  of £x one divides the final amount, x, by 117.5 and then multiplies by 17.5: which equals VAT.

Example: I buy an office PC for £1,750.00 including VAT: how much VAT have I actually paid?

1,750/117.5 = 14.893617 X 17.5 = £ 260.063829

I suppose I was fortunate in learning my 'rithmatic in the old days before calculators: we were compelled to use Proportion.

Which is extremely 'andy 'arry, when calculating margins: such as margins on cost: and achieved margins on turnover, to arrive at working GP (Gross profit etc.) and what are called ratios.

'Cos your average calculator goes doolally when trying to work out margins!

Example:

What is the value of Net Profit expressed as a percentage of Gross Revenue (Turnover)?

Gross Revenue (Turnover) is £93,000.00

Net profit (NP) is:                   £ 15,750.00

Proportion:

15,750 X 100 = 1,575,000 / 93,000 = 16.935%

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Gluestick Collaborator

Gluestick

Posted
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My  personal calculator, Russet, is a long in the tooth Texas Instrument Touchscreen financial and works out loads of stuff including amortisation, statistics and interest (Annual Effective, APR etc).

However these days we tend to do everything using Excel and write formulae  and macros.

Excel is a very powerful tool if one knows how to use it correctly.

However and of course, one needs to understand proportion and percentages in order to write the formulae.

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idun Rookie

idun

Posted
Posted
Don't worry Pads, for my sins, many years ago I had to deal with VAT included in bills for a big company. Very few of the companies employees seemed to be able to get to grips with it including one bloke who I knew had two maths degrees.
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Chancer Newbie

Chancer

Posted
Posted
[quote user="Gardian"]

1st Jan 2011.

Keep up !  [;-)]

[/quote]

Why? It is of very little relevance to me any more, I am no longer a UK consumer, only when I return to buy materials and the VAT would need to be at least 600% to dissuade me from doing so.

Does that mean that it is till at 15% then? I thought that it was planned to run at 15% for a certain length of time now passed and then go up to 20%, did that change or was there an interim period that I was unaware of?

I can easily work out 17.5% in my head, add 10% then half of that, then half of that again but for most people 20% will be far easier to cope with, it will certainly make it easier for me to calculate the VAT element of a TTC sum, that is tough!

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Gluestick Collaborator

Gluestick

Posted
Posted
15% to try and "stimulate the economy" (Which it didn't): 15% from December 1st 2008 :reverted to 17.5% Jan 1st 2010.

Increases to 20% as from Jan 1st 2011.

Quite a change from Heath's "One simple low tax!" back in 1973..........................................

[Www]

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