EE 14.8% Increase on Whole Package Fee Including VAT

YorkshireTyke69

Hi, I have just had a conversation with an EE adviser regarding the latest price increase on 1st April, I would have thought that the only part of your package that can be affected is the total before VAT is added? Yet I have just been told that the 14.8% increase is on the full price I pay. Surely that can't be right?

Thanks In Advance 

EssexExile

Surely when the price goes up by14.8% VAT is charged on the new price, so will be 14.8% higher?

TadleyBaggie

Indeed, if you do the calculation both ways it works out the same. Here is a simple example:

Assume pre-VAT price is £10, so price with VAT is £12 (£10 + £2).

Now if the pre-VAT price in increased by %10 it becomes £11, the new VAT amount is £2.20, making a new price with VAT £13.20.

However if you just apply the 10% to the original post-VAT price, £12 + £1.20 (10% of £12), you get £13.20.

So in practice it make no difference.