Help with Vat please

[Tigger2shoes]

Can any one tell me the fraction at 13% for vat
I know its 1/6 for 20% and 1/21 at 5% but how is that sum worked out please ?

I had a easy way of working it out written down last year but lost it

Many Thanks

[Tony Hague]

VAT component as fraction of VAT inclusive price = VAT%/(100+VAT%),

so 20/(100+20) = 1/6, 5/(100+5) = 1/21, 13/(100+13) = 13/113 - no neat answer, unfortunately.

[Geoff]

Slightly strange question but I think I know what you mean.

If something costs 100 without VAT

with 20% VAT it costs 120 so VAT fraction is 20/120 or 1/6
with 5% VAT it costs 105 so VAT fraction is 5/105 or 1/21
with 13% VAT it costs 113 so VAT fraction is 13/113 or 1/8.7

- but what carries a VAT rate of 13%?

[Tigger2shoes]

Many thanks for the replies chaps.
Are you sure of 1/8.7 ? how can it have a .7 ? sorry maths not my strongest blessing
Geoff .... I do my husbands paper work who is self employed ...
Now he is telling me ( im not convinced ) that for self employed people the rate of vat is a sliding amount as he has been told in a letter .... I have read the letter and im still not convinced that that is what it means , still im doing both rates as I go so I dont have to go back and do it all over again later ....
Any one else heard of this sliding rate ? Who can comfim it to me

[Geoff]

As Tony said, his post crossed with mine, the answer is 13/113 that doesn't come to a neat answer hence 1/8.7 (not exact use 13/113 if the calculation matters).

I don't know anything about VAT rates or tax returns for the self employed (apart from in general they don't pay enough tax compared with PAYE people) but I cannot see any sign of odd rates or sliding rates on this page http://www.hmrc.gov.uk/vat/forms-rates/ ... ates.htm#1

[Tigger2shoes]

Im not having a bun fight but dont know how you can say that ...hubby pays 20% tax plus has to lower his rates as he has to charge his customers VAT so he can stay at a good competative rate.
On top of a 15 hour day 7 days aweek .....
Trust me its not easy being self employed well not in his job anyhow
If he worked on a hourly rate it would be below national min .....

[Catherine]

My OH is also self employed (Agricultural Engineer) and he supplies goods and services which attract 20% VAT we have never heard of a sliding scale for VAT, I also do his books, and just work on that policy.

Where was the letter from?

Is he VAT registered, if not he will not supply a VAT invoice.

[Tony Hague]

I'm not an expert, but as Catherine says, you only charge VAT if you are VAT registered. If you are VAT registered, you effectively are an unpaid tax collector - you charge VAT on your sales, deduct from it the VAT you have paid yourself on your purchases, and send the rest to HMRC.

My understanding is that the VAT rate depends on the product or service. Since you as a business effectively collect VAT from your customers on your sales, you aren't paying it yourself, your customers are, so any sort of relief for small traders would not make much sense to me.

There is, however the crazy VAT margin scheme applying to works of art, collectables and second hand goods to confuse the issue.

[Tigger2shoes]

Yes he is is Vat reg ... But as he never use to be until he reached a limit of earnings , now he has to add this to his rates ( not his choice ) so has had to reduce is own rate to stay competative with people who dont ...
Im not complaining about the amount although its alot fo the hours he has to work ...just trying to do the paper work. He dosnt buy or sell any thing as he is a sound engineer just sells his skills so gets no relief back from any thing

[JohnN]

Happy New Year T2S,
I was a self-employed journalist for the last 10 years before I retired. My income was well below the VAT threshold of £31k but I registered because it helped me be accepted as genuinely self-employed by HMRC.
I'm not having a go but it seems the VAT threshold is now £73k for turnover. For a purely "service" set up that should provide a reasonable income. So why stay registered if it affects your competitiiveness, unless there is another reason like I had?
There is a useful government VAT site on the internet which gives all the rates etc. (http://www.hmrc.gov.uk/vat/forms-rates/rates/index.htm)
Good luck.

[Elaine]

Ye gods.....I don't understand a word of all that mathematical stuff.
Hats off to anyone who can do fractions....I never understood them at school and was therefore bottom of the class all the time. Algebra was even worse, it made no sense to me whatsoever. One teacher spent hours trying to help me, to no avail. I still have my school report, which states;
"Elaine tries very hard but finds this subject elusive"....and I still do!

Tigger2shoes and Catherine, you have my utmost respect!!
Cheers.

[Catherine]

Cheers Elaine, but I am by no means good with figures. I used to be a Secretary and did Excel basics (spread sheets). Since giving that job up and doing the books for my OH I taught myself much more and now I do all his accounts on spread sheets, it is brilliant as it does all the calculations for you, (as long as you know how to put a formula at the bottom of each column) It has certainly made my job a lot easier.

[Tigger2shoes]

And I just use my fingers and toes