What you need to know

Things to remember:

  • To find 20% of a number we divide by 5.
  • To find how much something is after VAT, we divide by 5 and add this new amount to the originally amount.
  • To find the original amount of something after VAT, we divide by 6 and multiply by 5.

VAT is a tax of 20% that is added to most goods. This topic should be pretty nice, because all we really need to do is find 20% of something!

Hint: Remember, to find 20% of a whole (100%), we divide by 5.

 

What is 20% of 65?

65\div5=13

20% of 65 is 13

 

A pair of shoes cost £65 before VAT. How much will the VAT be?

\pounds65\div5=\pounds13

The VAT on the £65 shoes is £13

 

There are three types of VAT question:

  • Finding the VAT of an item
  • Finding how much an item costs after adding the VAT.
  • Finding out what the the original cost of an item was before VAT was added.

The meal costs £40 before VAT. What is the value of VAT that will be added?

40\div5=18

The VAT of the meal will be £8.

A car costs £8000 before VAT. What will be the price of car after VAT is added?

 

Step 1: Find the value of the VAT

\pounds8000\div5=\pounds1600

Step 2: Add the VAT (the value in Step 1) to the original amount.

\pounds8000+\pounds1600=\pounds9600

The value of car after VAT is £9600

A computer costs £750 after VAT. What was the cost of computer before the VAT was added?

 

We need to think about the value of the computer in two ways:

  • The value before VAT, the original amount.
  • The value after the VAT is added.

If we think about the original value as 100% then we have added 20% to get the value after VAT.

Original amount = 100%

Amount after VAT = 100%+20%=120%

So, we are actually trying to get from 120% to 100%, which we can do by subtracting 20%. We need to be careful here, 20% of £750 will be more than 20% of the original amount, so we will do this in slightly different justify.

Step 1: Divide by 6 to get 20%.

120\% \div6=20\%

\pounds750 \div6=\pounds125

We now have two different steps to choose from to find the original 100%.

Step 2a: Subtract the value in Step 1 from the original amount.

120\%-20\%=100\%

\pounds750-\pounds125=\pounds625

Step 2b: Multiply the value in Step 1 by 5.

20\%\times5=100\%

\pounds25\times5=\pounds625

So, as we can see, it doesn’t matter which method we choose, we will get the same answer.

Example Questions

Question 1: A pair of jeans cost £75, what is the value after VAT?

Answer

Step 1: Find the value of the VAT

 

\pounds75\div5=\pounds15

 

Step 2: Add the VAT (the value in Step 1) to the original amount.

 

\pounds75+\pounds15=\pounds90

 

The value of jeans after VAT is £90

Question 2: A new game costs £45 after VAT, what was the original cost?

Answer

Step 1: Divide by 5 to get 20%.

 

 \pounds45 \div5=\pounds9

 

Step 2a: Subtract the value in Step 1 from the original amount.

 

 \pounds45-\pounds9=\pounds36

 

Step 2b: Multiply the value in Step 1 by 4.

 

 \pounds9\times4=\pounds36