How to Calculate an Ex-VAT Price
Value Added Tax is a sales tax on taxable goods and services that is calculated at two different rates. The standard rate is 17.5 percent (20 percent, as of Jan. 4, 2011) and the reduced rate (5 percent). If you are a VAT-registered business and you collect sales tax for Her Majesty's Revenue and Customs, then you must calculate the price of goods with VAT (VAT-inclusive) and without VAT (VAT exclusive, or ex-VAT).
Instructions
-
-
1
Write down the amount the item costs. For example, the item might cost £235.
-
2
Write down the VAT tax rate on the item as a decimal. For example, 20 percent is 0.20, 17.5 percent is 0.174, and 5 percent is 0.05.
-
-
3
Add 1 to the figure from Step 2. For example, if you wrote down 0.175 (17.5 percent), then:
0.175 + 1 = 1.175.
-
4
Divide Step 1 by Step 3. In the above example, if the £235 item was sold at the standard rate of 17.5 percent, then £235 / 1.175 = £200.
