• If an item is priced at £100 before VAT,... cost £117.50, including VAT at 17.5%. This is
• If an item is priced at £100 before VAT, it would cost £117.50, including VAT at 17.5%. This is what the price tag would say.
• Its price including VAT at 15% would be £115.
This is what the customer would be charged.
• The saving is £117.50 – £115 = £2.50. This needs to be compared with the price on the tag
2.50
=
5
=
1
117.50
135 47
• Why do you think the shop shows the reduction as a fraction and not a percentage?
© MEI 2009
Teachers’ notes
Links
Students need to have met the idea of VAT and working with percentages before doing this. It could be used at the end of a lesson on VAT, at the start of a lesson on using multipliers for percentages or in a revision lesson.
• Another way to show that it is 1/47 is to start with price P ; the saving is
1.175P – 1.15P = 0.025P.
• As a fraction, the saving is
0.025
P
=
25
=
1
1.175
P 1175 47
• This does not work out nicely as a percentage and it is not 2.5%
(as some people thought it should be when the VAT rate changed).
© MEI 2009
