There are three rates of VAT. The rate to be charged by the business is predetermined based on the item that is being sold or the service being offered. The rates are:
You have sold two products. The net sales price for the first product is £375. The VAT will be charged at the reduced rate. What would the amount of VAT for this item be?
The reduced rate is charged at 5%. The calculation is as follows: £375 x 5% = £18.75.
Net = £375
VAT = £18.75*
Gross = £393.75
The £75.00 figure would be if the VAT was charged at the standard rate of 20%.
The sales price for the second product includes VAT charged at the standard rate. The total is £600. What would the amount of VAT for this item be?
The standard rate is charged at 20%. The calculation is as follows: £600 / 120 x 20 = £100
Net = £500
VAT = £100*
Gross = £600
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