Struggling working out mark up when charging vat

Prosperous1

Hi all.

I'll keep it simple. I am vat registered so all my goods have vat charged when bought in and then I charge the customer. I have no problem with this.
What I am struggling to do "easily" is come up with a formula to workout my markup to add varying amounts on each sale.
As all my prices are different so for example if product a costs me £40 plus vat and I want to make £20 take home profit after I've claimed the vat back on the purchase and paid the vat man the vat I've charged on the sale is there a simple calculation. And subsequently if I want to alter the mark up to 25/30 etc.

I'm sure this is really simple but I am having a brain freeze.

Thanks for any input

Aquamania

Prosperous1 wrote: »

Hi all.

I'll keep it simple. I am vat registered so all my goods have vat charged when bought in and then I charge the customer. I have no problem with this.
What I am struggling to do "easily" is come up with a formula to workout my markup to add varying amounts on each sale.
As all my prices are different so for example if product a costs me £40 plus vat and I want to make £20 take home profit after I've claimed the vat back on the purchase and paid the vat man the vat I've charged on the sale is there a simple calculation. And subsequently if I want to alter the mark up to 25/30 etc.

I'm sure this is really simple but I am having a brain freeze.

Thanks for any input

Yes, simply account excluding VAT ... which is exactly what you should be doing

So if a product costs you £40 plus vat, then the purchase price to you is £40

If you then want to mark it up by £20, then add £20 to the £40 it cost you, gives a selling price of £60.

Don't forget to add VAT to the sales invoice, but ignore that for accounting purposes as all you are doing is collecting tax on behalf of HMRC.

You can ignore the VAT paid when you purchased the item because, as you say, you will reclaim that.

paddyrg

If you want a profit of £20, you add £20+VAT (£24) to the purchase price.

Eg, you buy for £40+ VAT so pay £48 in cash
You offset the £8 so the cost to you is £40
You add the £20 so £60
You charge VAT at 20% (£12)
Customer pays £72

Same result as £48 + £24 =£72, so for ready reckoning you can do the mental sums post-VAT, just add VAT to your markup then add that to the VAT inclusive price you paid.

Prosperous1

Aquamania wrote: »

Yes, simply account excluding VAT ... which is exactly what you should be doing

So if a product costs you £40 plus vat, then the purchase price to you is £40

If you then want to mark it up by £20, then add £20 to the £40 it cost you, gives a selling price of £60.

Don't forget to add VAT to the sales invoice, but ignore that for accounting purposes as all you are doing is collecting tax on behalf of HMRC.

You can ignore the VAT paid when you purchased the item because, as you say, you will reclaim that.

Thanks. I get this, nut I was after the sellout price to the customer in this case £72. I know I can just add the mark up then add the vat but i was seeing if there was a formula, such as purchase price + 20 x0.12 etc....

Prosperous1

paddyrg wrote: »

If you want a profit of £20, you add £20+VAT (£24) to the purchase price.

Eg, you buy for £40+ VAT so pay £48 in cash
You offset the £8 so the cost to you is £40
You add the £20 so £60
You charge VAT at 20% (£12)
Customer pays £72

Same result as £48 + £24 =£72, so for ready reckoning you can do the mental sums post-VAT, just add VAT to your markup then add that to the VAT inclusive price you paid.

Thanks, appreciated

Aquamania

Prosperous1 wrote: »

Thanks. I get this, nut I was after the sellout price to the customer in this case £72. I know I can just add the mark up then add the vat but i was seeing if there was a formula, such as purchase price + 20 x0.12 etc....

To get the all inclusive sale price to the customer (e.g. for a retail sale) then it's quite simply your sale price (exc VAT) plus vat at the appropriate rate.

So assuming the item is liable to standard rate VAT (i.e. 20% currently), then it's your selling price x 1.2

e.g. in the above example

Your selling price (£60) + VAT (20%) = total price to customer

i.e £60 x 1.2 = £72


But remember, that's £60 for you and £12 for the tax man.
Hence why you should always account using the vat exclusive values

Prosperous1

Aquamania wrote: »

To get the all inclusive sale price to the customer (e.g. for a retail sale) then it's quite simply your sale price (exc VAT) plus vat at the appropriate rate.

So assuming the item is liable to standard rate VAT (i.e. 20% currently), then it's your selling price x 1.2

e.g. in the above example

Your selling price (£60) + VAT (20%) = total price to customer

i.e £60 x 1.2 = £72


But remember, that's £60 for you and £12 for the tax man.
Hence why you should always account using the vat exclusive values

HI again and thanks for replying.

I think i may not have described accurately what I need.

I know how to work the vat out, thats not an issue. What im struggling with is I have a stock list with thousands of different products, some of which have different mark ups.. so if i look at product @a@ for example and its buy in price to me is £16.95 plus vat I wanted to be able to easil quote apirce to the customer that left me with £20 profit after vat charged, claimed and repaid etc.

Scenario...
Cusomter comes in and wants a choice of 3 products. All i have to go off is my buy in list and i want to give a customer a fully inclusive price quickly..

First product costs me 16.95 plus vat
second costs 23.85 plus vat
third costs 59.90 plus vat

can you see why I want to simplify it ;-)

Aquamania

Prosperous1 wrote: »

HI again and thanks for replying.

I think i may not have described accurately what I need.

I know how to work the vat out, thats not an issue. What im struggling with is I have a stock list with thousands of different products, some of which have different mark ups.. so if i look at product @a@ for example and its buy in price to me is £16.95 plus vat I wanted to be able to easil quote apirce to the customer that left me with £20 profit after vat charged, claimed and repaid etc.

Scenario...
Cusomter comes in and wants a choice of 3 products. All i have to go off is my buy in list and i want to give a customer a fully inclusive price quickly..

First product costs me 16.95 plus vat
second costs 23.85 plus vat
third costs 59.90 plus vat

can you see why I want to simplify it ;-)

That's quite simple.

The formula is: b + 20 = s

Where b = your buying price (excluding vat)
and s = your selling price (excluding vat)

Prosperous1

Aquamania wrote: »

That's quite simple.

The formula is: b + 20 = s

Where b = your buying price (excluding vat)
and s = your selling price (excluding vat)

The penny has dropped, the lightbulb has shone, and i feel like a t1t. Thanks for your patience

gingerdad

surely just multiply the sale price by 1.20 to get your price. including vat.

we mark up 100% and so times all ex vat prices by 2.4