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How does Vat work?

Vat is a tax on goods. If the person you are being from is Vat registered, he will add 20% to the final price.


So if something is £100, 20% needs to be added.


£100+ 20/100


£100=£20


=£200


However, as a customer you pay the final price and sometimes do not see the VAT breakdown.


It is possible to work it out.


Taking the same example, the price you paid was £120.


You use a fraction of 1/6.


So 1/6 x £120= £100


Thus £120-100= Vat paid.


When you fill in your Vat return, you claim £20 back.


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