Calculating VAT accurately is so important. As you know we love Cloud Accounts packages like Xero. The beauty of these systems is they are always up to date and can process your transactions smoothly, assuming no human errors get in the way.
However sometimes you may still need to calculate VAT manually – whether for a quote or a proforma invoice. You may also want to doublecheck that an invoice (or bill) from your supplier has the correct VAT.
However be careful! Percentages can be confusing. The most common VAT rate at the time of writing this blog is 20%. If the gross price of an item is £100 then the VAT isn’t £20! The VAT is actually £16.67 because the 20% VAT is calculated on the net amount, which in this case is £83.33.
So 20% of £83.33 is £16.67 and to prove this: £83.33 + £16.67 = £100.
If the net price was £100 then the VAT would be £20 and the gross price is £120.
Confused? Well head over to our VAT Calculator and check it out. The answers will be the same as the VAT calculations and images in this blog.
So please bookmark our VAT resource page and keep calculating VAT correctly! However if it is all too much and you wish to discuss VAT further then please get in touch.
