VAT Calculator is an excellent online tool that allows users to calculate the exact amount of Value Added Tax also known as VAT. VAT is a very well-known form of tax that is charged by almost every small and big scale business upon sales of goods and services within the UK. This VAT Tax is applied mostly to business transactions but it’s also applicable to several other areas that we will discuss later on in this article.
Before we discuss any further, let’s have a look at the history of this VAT Tax to keep you aware of everything. It was first introduced in early 1973 as an alternative to a purchase tax. However; later on, due to its countless benefits in the taxation system, it was also introduced in many other European countries besides the UK. Recently, the standard rate of VAT tax was reduced from 17.5% to 15%, which is also known as Ex VAT, and later on, it was again increased up to 20% in 2011.
VAT Calc or VAT Calculation Method
Even though there are multiple methods for calculating the VAT tax but here we will discuss the most widely accepted methods in which there are very few chances of any error or mistake. Our UK VAT Calculator tool works on a very simple and easy formula. Here are some key steps that you should follow in order to calculate the VAT amount.
- First of all, you have to find out the net price of any product or service on which you want to calculate the VAT amount. Let’s suppose it’s around 50 Euro.
- Now, you have to determine the VAT rate. Let’s suppose the VAT percentage is 23% according to our example. Divide this by 100, 23/100=0.23
- It’s time to calculate the VAT amount; you have to multiply the net amount that we have calculated in step 2 such as 50*0.23=11.50
- Now, it’s high time to calculate the gross price, to do so, you have to multiply the net price of 11.50 that we have calculated in step 3 with the VAT rate.
- Add the amount to the net price, 50+11.50=61.50
Remember, if you will calculate the VAT tax on your own manually without using any reliable VAT Tax Calculator, then there will be more chances of errors and mistakes. We will recommend you use any authentic VAT Calculator to avoid any mistakes that may result in a huge financial loss for your business.
Click Here: VAT Rate in the UK
Important Information That You Need to Know About Calculator with VAT
As we have also discussed earlier, the VAT or also known as Value Added Tax is applicable on many goods and services in the UK. However; the current standard rate for the VAT tax in 2020 is around 20%. Remember, you are recommended to use this specific figure in your calculations otherwise you will get incorrect results while calculating the VAT tax.
However; you also need to make sure that this vat rate percentage is not the same for all goods and services. For some specific goods and services, the VAT rate is reduced up to 5%. Moreover; the VAT rate for buying and selling some items such as books, clothes for children, and many others is 0%, it helps to support the local community without imposing any financial burden on the lower class who are struggling for basic financial expenses.
If you are not aware of the VAT rate, then you can use our online VAT calculator as well to know about the current VAT rate in your country. You can also learn more about the VAT rate by using an authentic HMRC list.
Frequently Asked Questions about Online VAT Calculator
How do you calculate VAT?
To calculate the exact amount of VAT or Value Added Tax, you have to first learn about three different rates for VAT.
Standard Rate: It’s the standard rate that is applied to most of the goods and services and its value is 20%.
Reduced Rate: For some particular goods and services, the VAT rate is reduced up to 5% that’s why it’s called a reduced rate.
Zero Rate: As we have also discussed earlier, some goods and services have no VAT rate as they are subjected to 0% VAT. Those particular goods and services fall in this zero rate category of value-added tax.
Now you can calculate the exact amount of VAT in these three simple and easy steps.
- Take the gross amount for any sum that includes the items that you have sold or bought. Divide the total by 117.5 if the current VAT rate is 17.5%. However; if the VAT rate is different, then you should add 100 to the VAT percentage rate and then divide it by that number.
- Now multiply the result by 100 to calculate the accurate pre-VAT total.
- In the last step, multiply the result of step 1 by the current vat rate such as 17.5.
How much is the VAT in UK in 2021?
The current VAT rate in the UK for the year 2021 is 20%. Remember, it’s the standard VAT rate that is being implemented on the sales and purchase of many goods and services. However; the reduced rate is also the same up to 5% while there is no change noted in the zero rate of VAT for this year.
How do you calculate 15 VAT in South Africa?
As you are also aware of the 15% current VAT rate that is being applied to most of the goods and services in South Africa. The process to calculate the VAT in South Africa is almost similar to the one that we have explained above. You have to multiply the current VAT rate of 15% by the total pre-tax cost. And then the result will be taken as the cost of VAT that can be added to the purchase amount.
Who pays VAT buyer or seller?
To understand this simple process of VAT collection, you have to keep in mind that the seller of goods and services always charges VAT to the buyer. And then the seller is bound to pay this VAT tax to the government with the complete audit of their business while filling the annual tax information.
What do you mean by VAT inclusive?
The term VAT inclusive refers to the price that includes the value of the tax. This term is used to mention the price of any good or service that already includes tax.
How is VAT different from sales tax?
There is a huge difference between VAT and sales tax, sales tax is always collected by the retailer once the final sale in the supply process meets. In simple words, the end consumers of any goods or services have to pay the sales tax while on the other hand, the Value Added Tax (VAT) is collected by the sellers throughout the supply chain process.
What happens if you charge VAT but are not VAT registered?
You are not legally eligible to charge the VAT tax if your business is not VAT registered. However; in case of charging VAT without any registration, your customers can reclaim the amount that they have paid you in the form of VAT anytime otherwise you may have to face any lawsuit claim.
Can I claim the VAT back if I am not VAT registered?
Yes, according to the law, you can claim the VAT tax back if the business that you have paid for any goods or services is not VAT registered.
What are the types of VAT?
There are three different types of VAT and they are following:
Gross National Product (GNP).
Who is exempt from paying VAT?
While most of the goods and services are subjected to VAT tax, there are still some particular products that cannot be charged for VAT. Some particular excluding VAT businesses, charities, and other organizations are VAT exempted.