More than 5,300 bank branches closed last across Europe as customers switch from retail branches to online banking. Analysts believe that a growing number of banks will scale back their retail branches over the next year due to declining usage. Despite the massive increase in the number of customers using online banking, most of the…
Although VAT calculators are often employed by businesses to add VAT to the sales price of an item, customers can also benefit from calculating VAT for a number of reasons, usually to calculate the net price.
There is, of course, a mathematical formula which can be applied but plugging a few figures into a small online form to calculate VAT is so much simpler and quicker. Any time you have access to the web there is a VAT calculator available, most can be accessed through smartphones as a matter of fact.
One thing to be leery of is the fact that VAT calculation is now done on a 20% VAT calculator whilst that amount was calculated on a 17.5% VAT calculator before the turn of the year. If you are not careful to change the percentage to the current year, your total will be skewed by that much.
Oddly enough, even though the average online VAT calculator took this into consideration, many users don’t understand that they can simply change the percentage and the VAT calculations will work just fine with the new percentages. For instance if you were to plug in a £100 item with 17.5% added VAT you would come up with £117.50 for the item.
That’s pretty straight forward, but an online VAT calculator can also provide the reverse when you are looking for what an item cost before Vat was included. With the same item, let’s say you paid £100 which already included VAT. That was your gross payment, net prior to VAT according to a UK VAT calculator would be £85.11.
The above is an example of how to calculate VAT backwards. You would calculate VAT from gross amount and then divide that number by 1.175. That would give you the amount £85.106 which of course is rounded down to £85.11. Calculation for 20% VAT is much easier and can often be done in one’s head if the figures are even and small enough to handle.
For instance, finding VAT on £100 is quite obviously going to be £120. But trying to figure out how to find VAT backwards might necessitate the need of a VAT reverse calculator. You would plug in the gross figure of £100 and then the VAT rate of 20% and your figure would be £16.67 as what you are paying in VAT and the item’s net cost would be £83.33.
How to Calculate VAT
Unless you work with figures on a daily basis, it is sometimes easier to find a VAT calculator than it is to learn how to calculate VAT. Even so, it does help to have an understanding of the process so you can get a ‘quick’ idea when pricing in stores, or for a next order you intend to make if you are a merchant.
Asking yourself ‘How do I calculate VAT?’ might be easier asking where to find an online VAT calculator, but if in a pinch you get stuck. Just remember the following information. The best way to learn how to calculate VAT at 20%, assuming the net value of the product is £100 is:
1.20 x £100 = £120
That’s pretty straightforward, right? Ok, now if you know the price of the item with VAT included, in this case £120 then the reverse operation will get you back to the net price. Your calculation would look like this:
£120 / 1.20 = £100
Again, as you can see, those are fairly simple figures to work around, but if you are talking about an item that is £1,876.99 you would almost certainly need to use an online VAT calculator.
Learning how to calculate VAT is as easy as learning how to type a few figures into an online chart and that is fairly easy. Since you can access a VAT calculator even through mobile devices, there is never a need to let VAT get the better of you again.