VAT Calculator

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Here’s The Most Reliable Online VAT Calculator For You

If you have anything like receipts or invoices to calculate VAT (Value-Added Tax) on, then this VAT calculator is all you need. We have made sure that it’s easy and highly understandable for all of the businesses and individuals around the globe. The negative factor about these calculators on the web is that they don’t usually offer variable VAT percentage. Ours include one so that everyone, who know the VAT rates in their countries, could either add that to the net amount or subtract that from the gross amount. 

It’s Super Easy to Use

Do you see those 3 boxes under “Choose VAT Rate”? You just have to select the VAT percentage (20% or 5%) or simply add the amount you want in the box next to them. “Including VAT” actually shows the gross amount (amount after adding the VAT rate) and “Excluding VAT” shows the net amount (amount without adding the VAT rate). Enter the amount of your choice into the “Excluding VAT” box and you’ll instantly know the gross amount and the applied VAT amount. So basically, this is both: an add VAT and reverse VAT calculator. 

You can also exclude the VAT rate from the gross amount to conclude the corresponding net amount. For this, just choose the VAT rate first, add the gross amount into the “Including VAT” box, and you’ll end up with the net amount. 

Understanding VAT

Governments place a value-added tax on a product whenever a value is added to it at every stage, from the production of that product to its sale. Basically, if the consumer is to buy something that costs £10, then they have to pay £12 for it. That extra £2 are because of the value added because of the cost of labour, raw materials, etc. 

Why VAT is Important

Every Government needs to do something for the development of their country and bring ease to the citizens. For this, they have lots of expenses that they have to fulfil. All of these expenses must be paid at all costs so the country doesn’t remain in debt. To make sure that the expenses are paid, the government puts taxes on different things. The taxes may include income tax, tax on fuel (petroleum), etc. 

The problem begins here: all of us want justice in taxes so there’s nothing unfair going on with the citizens. So when the income taxes shoot up to the sky and even people who earn a lot can’t seem to accept it, and the government still has lots of expenses to pay, then the income tax gets turned into VAT. Basically, it is a tax on the whole supply chain (from the production of products to their sales) and you can’t really prevent yourself from paying it. Are you familiar with the sales tax? It is excluded from the value of the product. However, the VAT is included in the product value. 

How Much VAT is Charged in the UK

Now that you know what VAT is, you need to know how the United Kingdom distributes it into three rates. In England, Wales, Scotland, and Northern Ireland, there are standard, reduced, and zero rates. These rates are distributed according to the categories of services and goods. 

The standard rates of VAT are applied to most of the products and services in the UK. They may include clothing for 14 years old and older people, food, restaurant, alcoholic drinks, non-alcoholic ones, energy, water, electricity, electrical products, and a lot of other things. Also, it is also applied to parking, fuel, tolls, bridges, roads, etc. In the UK, 20% is the standard rate of value added tax. 

There are a few products including energy, products for children, pregnant women, and old people, on which the VAT rate is 5%. This is actually the reduced rate of VAT. 

There are also a few products that don’t have a VAT at all. This zero rate of VAT is on some particular products that are very essential such as some foods, children clothing, products and services for disabled people, medications, helmets, etc. Services such as funeral services, artistic goods, training, education, physical activities, insurance, financial services, postal services, health services, are also extremely essential in the UK and so, they are free from VAT. 

Differences of VAT in Other Countries

You might know that all countries that have VAT in their system, follow a general blueprint of it. For example, if there is 20% VAT here, then it will be 20% VAT there as well. However, there is always some difference that you can notice if you go into finer details. According to this, the VAT of one country won’t be the same as the VAT of the other. The difference between the VAT of different countries is because of the taxes that are imposed on particular services and goods. 

Let’s take the Philippines as an example. There, the senior citizen like people above the age of 50 is free from paying their VAT. I’m talking about the VAT for goods that they use personally. 

If we take a look at China, we’ll realize that there is a reduced VAT rate that is applied to products like oils, books, etc.

The good thing is that a lot of countries ignore imposing VAT for particular products and goods like food, education, medical supplies, health services, etc. 

Advantages of VAT

  1. Since VAT is actually an expenditures tax, the revenue will always be the same. 
  2. There are a number of indirect taxes such as GST tax, sales tax, per unit tax, value added tax, etc. Out of all these, VAT is considered very easy to handle and manage.
  3. No one can actually avoid value added tax at any case. Everyone needs to pay this tax from the initial level of production of the products to their sale. 
  4. Because of the VAT system, the generated revenue is pretty huge even though VAT is low. 
  5. The best thing about value added tax is that it is always collected in instalments. The instalments are very small and so, even middle-class people can afford it. This way, consumers have a really low burden.
  6. VAT is actually a neutral tax and thus it is imposed on all businesses. 

Disadvantages of VAT

  1. Did you know that VAT is based on the concept of the full-billing system? This is why it is expensive to implement VAT.
  2. It is not a simple task to calculate value added in every stage of the production of goods. Thus, VAT is difficult to understand.
  3. Because of the regressive behaviour of VAT, poor people will be more affected than the elite class because the poor ones spend a larger proportion of their income.
  4. All of the sales and purchase data should be preserved which will result in a boost in the compliance cost.

Understanding the Process of VAT

What’s a better way to understand something other than using an example? So let’s suppose that Deltalite is a high-quality and expensive producer and seller of light bulbs in Indonesia. Indonesia has 10% value-added tax (VAT). Now let me explain how to work out VAT in this situation. 

Deltalite’s manufacturer gets all the raw material for, let’s say, £2.00. Now add the VAT of 20¢ that is the amount to be paid to the government of Indonesia for a total price of £2.20.

Then, the manufacturer sells a light bulb to a retailer for £5.00 excluding a VAT of 50¢. So the total amount becomes £5.50. But Deltalite’s manufacturer gives only 30¢ to Alexia. 30¢ is actually the total value added tax at this point excluding the previous VAT that was charged by the supplier who supplied raw material. £3.00 is actually the gross margin x 10% also equals 10% of the manufacturer’s gross margin of £3.00. £3.00 is actually the manufacturer’s gross margin and the 30¢ that the manufacturer gave to the government of Indonesia is actually 10% of it. (£3.00 x 10% = 30¢)

At the end, the retailer sells the light bulb to consumers for £10 excluding a VAT of £1. So the price of the light bulb as a retail product becomes a total of £11. The retailer gives 50¢ to the Indonesian government. This little amount is actually the total VAT at this point (£1) minus the previous 50¢ VAT that was charged by Deltalite. This 50¢ also shows 10% of the retailer’s gross margin on Deltalite.

 

 

About

Vat Calculator is a small tool that we’ve launched in the UK. Our primary aim is to give the whole world a super easy tool to calculate the VAT (Value Added Tax) for the goods and services they’re selling. We want everyone to keep up with their businesses without violating any laws. 

We built this online VAT calculator so we could make it convenient for the people of United Kingdom and other countries to calculate their VATs without getting into mathematical formulas. Plus, not every country has the same VAT rates. The VAT rate for UK is 20% and that of other countries might be different. 

Our Mission

We look forward to helping individuals and businesses to calculate and keep up with the VATs of their respective countries and keep their investments and purchases legal. We also have an aim to let people learn the details about value added tax. By 2021, we are planning to add a range of articles and guides to cover problems and information related to VAT to help people learn better.