New to Accountancy  Help with deducting VAT please :)
Quirkydamsel
Registered Posts: 9
Hello there
I'm relatively new to accountancy and would like help with deducting VAT please.
Apologies if this is a silly question.
Thanks
I'm relatively new to accountancy and would like help with deducting VAT please.
Apologies if this is a silly question.
Thanks
0
Comments

Divide by six: e.g. 120 / 6 = 20 so 120 gross  20 vat = 100 net
Though I generally prefer using divide by 1.2 (assuming this to be 120% of the net) as it's easier to relate when the tax rate is something other than 20% like when it was 17.5% a few years ago as dividing by six will no longer work, while dividing by 1.175 will.
Divide by 1.2 e.g. 120 / 1.2 = 100 so 120 gross  100 net = 20 vat. Obviously the divide by six rule is much easier when stuck without a calculator, but generally and in an exam you will have one.1 
Thanks for your reply, but I'm even more confused by this. I am new to learning VAT. I am able to add it, (ie amount x 20%), but unsure on deducting it.
Is there an easier method that can just be applied for each sum?0 
Another option is to divide the total amount with VAT by 120 the times this by 100  you know the figure includes 20% VAT and the remainder is the 100% so the total figure is 120%.
Eg £7.20 / 120 x 100 = £6.
I'd really recommend getting back to some GCSE maths level percentages, it's going to come up a fair bit in AAT as you progress and it will help your learning so much. I've seen references to YouTube videos on percentages which may be worth checking out, or get someone to explain it who understands it well. It does click eventually and becomes automatic as you practice, and you will get lots of percentages to practice!2 
Hello again
I've been absent from my accountancy studies for several months, but I'm now returning. I'm still struggling with deducting VAT and hoped that someone can give me some help please.
I don't understand the method of dividing by 6 and neither the 120% bit either.
This is proving difficult as it's used frequently through the topics. I'm doing level 2 and have returned to the beginning and practiced the discounts and vat assessment yesterday.
Once I can accept the method, I'm good with calculations, it's just having it explained in simple terms.
Sorry guys, but thank you.0 
If you have an invoice at £100 excVAT, and £120 incVAT
It could also be seen as 100% of net price, and 120% of the net price.
So dividing the 120% net price by 6 would give you the 20% VAT
It could also be seen as a fraction 20/120, 10/60, 1/6th0 
£gross ÷ 1.2 = £net
Example
£120 ÷ 1.2 = £100
I hope the helps0
Categories
 All Categories
 1.2K Books to buy and sell
 2.3K General discussion
 12.5K For AAT students
 318 NEW! Qualifications 2022
 161 General Qualifications 2022 discussion
 11 AAT Level 2 Certificate in Accounting
 56 AAT Level 3 Diploma in Accounting
 87 AAT Level 4 Diploma in Professional Accounting
 8.8K For accounting professionals
 23 coronavirus (Covid19)
 272 VAT
 92 Software
 273 Tax
 135 Bookkeeping
 7.2K General accounting discussion
 200 AAT member discussion
 3.8K For everyone
 38 AAT news and announcements
 345 Feedback for AAT
 2.8K Chat and offtopic discussion
 582 Job postings
 16 Who can benefit from AAT?
 36 Where can AAT take me?
 42 Getting started with AAT
 26 Finding an AAT training provider
 48 Distance learning and other ways to study AAT
 25 Apprenticeships
 66 AAT membership