Question

In Jan 2011, the rate of VAT increased from 17.5% to 20%.
Work out the difference in price of a car worth £15000 + VAT due to the increase in VAT.

explain your answer.

Answer 1

The difference in price of the car due to the increase in VAT is £425. This is calculated by multiplying the original VAT amount of £2625 (17.5% of £15000) by the increase in VAT (20% - 17.5% = 2.5%). Therefore, 2.5% of £2625 is £425, which is the difference in price of the car due to the increase in VAT.

Answer 2

this is wrong.