Find the price before VAT
PremiumThe prices in column B include 25% VAT. In C2, work out the printer's price before VAT: divide by 1 plus the rate in F1, B2/(1+$F$1).
| A | B | C | D | E | F | G | |
|---|---|---|---|---|---|---|---|
| 1 | Item | Price incl. VAT | Price excl. VAT | VAT rate | 0.25 | ||
| 2 | Printer | 1000 | |||||
| 3 | Monitor | 2250 | |||||
| 4 | Keyboard | 375 | |||||
| 5 | |||||||
| 6 | |||||||
| 7 | |||||||
| 8 |
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Why this works
VAT is added to the price before VAT, so the total is that price × 1.25. Going back means dividing by 1.25: 1,000 / 1.25 = 800. Check it: 800 plus 25% of 800 (200) is 1,000. Taking 25% off 1,000 would give 750, which is wrong.
Common mistake: Taking 25% off the total, B2*(1-F1). That gives 750, because the VAT was 25% of 800, not of 1,000.
The answer
- C2
=B2/(1+$F$1)
Divide by 1 plus the VAT rate, for example =B2/(1+25%) or =B2/1.25. Multiplying by 75% would take off too much.
Subtract the price before VAT from the total, =B2-B2/(1+$F$1), which is 200 for a total of 1,000 at 25%.