Calculate New V.A.T Content

My girlfriend’s parents run their own business and on Saturday her Mum asked if I knew of a quick way of calculating the V.A.T content of a net value. She gave me the example invoice with a net price of £24,000 with the old V.A.T rate at 17.5%, she could multiply the net price by 7 and then divide by 47 to retrieve the V.A.T content of £3,574.46.

So I set about working out an analogous way of doing the same thing but with the new V.A.T temporary rate of 15%. I came up with two solutions, one will calculate the gross amount pre V.A.T and the other will work out the V.A.T content of the net amount.

Both examples Below use a Net value of £722, using the new V.A.T rate of 15%.

Calculate Gross using new V.A.T rate

This method simply requires you to multiple the amount by 20 and then divide by 23.

E.g: £722 multiplied by 20 divide by 23 = £627.83

We can verify this works by taking this value and adding 15% to it however you like, I personally multiply by 1.15, so £627.83 multiplied by 1.15 = £722, which confirms it works!

Calculate V.A.T content using new rate

To achieve this you first multiply the net value by 3 and then divide by 23

E.g: £722 multiplied by 3 divide by 23 = £94.17

We can again verify this works in two ways. First by adding this value to the gross amount of £627.83, £627.83 (gross)+ £94.17 (v.a.t content) = £722 (net). Secondly we can just calculate 15% of the gross value itself, as mentioned before I like to use multiplication. So £627.83 multiplied by 0.15 = £94.17, again it works!

I hope this helps anyone who may actually read this, if you found it helpful or have any questions then leave a comment and I will get back to you.

I should also probably note that this has nothing to do with who I work for and it’s completely my own work…