VAT on an iPhone

[mickytruelove]

Bit of a strange one but i noticed when ordering an iPhone that the VAT amount didnt seem right.

£999 for the iPhone 12 Pro. Under the price it says includes VAT of £166.50.

Surely the VAT should be £199.80 or am i missing something obvious?

[Simpo Two]

You're going from the wrong side.

The net price is £832.50. £832.50 + 20% = £999.

[blank]

You've worked out 20% of the inclusive price, not the original net price.

VAT (at 20%) accounts for 1/6 of the inclusive price.

£100 item, add 20% VAT = £120 total. 20/120 = 1/6.

[plasticpig]

Yes £999 is the VAT inclusive price so you divide £999 by 1 + the VAT % to get the price ex vat so 999 / 1.20 = 832.50

999 - 832.50 = 166.50 which is the VAT amount.

[steve2]

Easy calculation is any amount say £500 times 1 divided by 6 equals £83.33 vat
£416.67 plus £83.33 equals £500

[Simpo Two]

steve2 said:

Easy calculation is any amount say £500 times 1 divided by 6 equals £83.33 vat
£416.67 plus £83.33 equals £500

My logic is that £999 represents 120%, so to find what 20% is you first divide by 120 (to find out what 1% is) then multiply by 20. Once you know what 1% is then you can find any percentage not just 20, and can cope with any VAT rate.

Obviously you need to know whether £999 is inclusive or exclusive of VAT. Retail prices are always (or should be) quoted inc VAT because Joe Public can't reclaim it so has no need to know otherwise.

[jammy-git]

Simpo Two said:

steve2 said:

Easy calculation is any amount say £500 times 1 divided by 6 equals £83.33 vat
£416.67 plus £83.33 equals £500

My logic is that £999 represents 120%, so to find what 20% is you first divide by 120 (to find out what 1% is) then multiply by 20. Once you know what 1% is then you can find any percentage not just 20, and can cope with any VAT rate.

Obviously you need to know whether £999 is inclusive or exclusive of VAT. Retail prices are always (or should be) quoted inc VAT because Joe Public can't reclaim it so has no need to know otherwise.

I do it the same way!

[mickytruelove]

Thanks everyone for pointing out my my brain fart.

So used of dealing with prices + VAT that it caught me out.