New VAT Calculation?

Hintza

Too early in the morning for me but what is the new inverse VAT calculation for 15% VAT rate?

The current one 17.5% to ascertain the VAT element is 47/7
(ie £100 item = £85.11 + £14.89 VAT)

Hintza

OK panic over the answer is 23/3.

Thanks

soolin

Glad you sorted that one out Hintza, I was running out of fingers here and backs of envelopes trying to work it out!

StaffsSW

Now let's be honest - how many traders/retailers etc will be passing this saving of 2.13p in the pound back to consumers....?

Just like small tax increases, I believe that it will be "absorbed by the seller"!

Final prices are not likely to be changing at all - ebay or elsewhere.

headcoat

Thats exactly my thoughts, are the little corner shops really going to go round and reprice all the stock and reduce mars bars by 1p. They will just sort it all out in the tax returns.

I have been considering getting something for xmas and know exactly how much it is now ie £24.99 so will be interesting to see if this is reduce.

StaffsSW

Still, there are plenty of people who will fall for the political spin, and believe that captain darling has made our lives wonderful. Omitting the fact that alcohol, tobacco and fuel has all had a duty increase, and a promise to increase national insurance in 2010...

I think the VAT move has been made for the benefit of businesses rather than the consumer.

soolin

Don't forget as well that petrol is going up by an average of 5p a litre next week. I can't believe people are not seeing through this feeble attempt to pull the wool over our eyes. I fear too many people will misunderstand VAT entirely and assume that all goods will be 2.5% cheaper, forgetting that VAT is actually only a small part of the total we pay.

I pity small business faced with a logistical nightmare from irate customers all wanting their 1ps back on the cost of their items..forgetting of course that most basic staples like food are VAT exempt anyway.

StaffsSW

Captain Darling is the political equivalent of the ebay postal gouger.

"This item is only 99p, and £10 postage!"

"We are cutting the tax on everything you buy - but adding a dfifferent tax to the price instead."

soolin

Some people are falling for it though. A lady at the gym this morning was planning on taking back her £7.99 Argos kettle bought yesterday as she says she will re buy it on Monday and save herself quite a bit

Edit. That's why I posted my earlier post, she believes she is going to get back 2.5% on the total.

Hintza

stevew8975 wrote: »

Now let's be honest - how many traders/retailers etc will be passing this saving of 2.13p in the pound back to consumers....?

Just like small tax increases, I believe that it will be "absorbed by the seller"!

Final prices are not likely to be changing at all - ebay or elsewhere.

Certainly not me!!!

However I can see prices being squeezed down by lack of demand.

Avoriaz

I calculate VAT using decimals not fractions.

If VAT is 17.5% then the calculation is

VAT inclusive price divided by 1.175 = VAT exclusive price
VAT = VAT inclusive minus VAT exclusive

If the VAT rate changes just change 1.175 to the appropriate figure, in the case of 15% it is of course 1.15

This example should make that obvious.

VAT inclusive price is £117.50

117.50 divided by 1.175 = 100

117.50 minus 100 = 17.50


This example is more real world

VAT inclusive price is £100

100 divided by 1.175 = 85.11

100 minus 85.11 = 14.89


With VAT at 15% this would be

VAT inclusive price is £100

100 divided by 1.15 = 86.96

100 minus 86.96 = 13.04


You can do the sum on a calculator with just two operations

Enter VAT inclusive, divide by 1.15, then subtract VAT inclusive.

Ignore the minus sign before the result and you have all the required figures.