The VAT, an abbreviation for Value Added Tax, is a tax you may encounter when making some purchases in the UK and Europe. VAT is a tax you pay when you buy goods or services from a VAT-registered business in the EU, including within the UK. Each European country has its own rates of VAT but here in the UK there are three rates; Standard rate, reduced rate and zero rate.
The gross VAT price is the price of the item with the VAT included. The net is the price without the VAT. If you are only visiting the UK then you can be eligible for VAT refunds when they depart the country, so it's handy to be able to calculate VAT you have paid based on gross purchase price.
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Things you need
- VAT percentage amount for transaction
Check your receipt to find the gross amount of the purchase.
Add one to the VAT percentage rate. For example, if the VAT is 20 per cent, adding 1 yields 1.20.
Divide the gross purchase price by the figure in Step 2. For example, if you bought a coat in London, and your gross price was 192 pounds, using the example above (192 divided by 1.20) yields a net purchase price of 160 pounds, leaving 32 pounds VAT.
Tips and warnings
- The standard rate of VAT is 20 per cent but was 17.5 per cent for the period 1 January 2010 to 3 January 2011. The reduced VAT rate applies to goods like children's car seats and is 5 percent. The zero rate VAT applies to goods which you don't pay any VAT, for example: basic food items, books, newspapers and magazines and items deemed to be essentials.
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