Latest Feature Updates & Announcements

30th June 2018

VAT Calculations

The way we calculate the Gross, Net and VAT amounts for your products (and delivery pricing) is changing. 

The changes will be made live on 8th August.  


If you enter the prices for your products excluding VAT, we'll calculate the Gross, Net and VAT amounts for your products as follows. 

From the Net price entered, we calculate the Gross by multiplying the Net by 1.2. This figure is rounded to 2 decimal places. 

From the Net price entered, we calculate the VAT by multiplying the Net by 0.2. This figure s rounded to 2 decimal places. 

A new Net price is then calculated by subtracting the VAT from the Gross. 


If you enter the prices  for your products including VAT, we'll calculate the Gross, Net and VAT amounts for your products as follows. 

All prices are stored net of VAT by dividing the Gross by 1.2. 

We'll use this stored Net value to calculate the Gross and VAT amounts (following the procedure above)  and then arrive at a new rounded VAT figure accordingly.


HMRC produce a VAT Guide which is published at https://www.gov.uk/guidance/vat-guide-notice-700    

Part (17) deals with the calculation of VAT on invoices and in particular how values should be rounded. The guide gives two options to choose from. 

VAT is calculated in accordance with part (17.5.2), VAT is calculated separately for an individual unit of an item, and rounded to the nearest 1p. 


Most ShopWired users will not be affected by this change. 

However, if some of your products are priced at values that can be affected by rounding changes, you might see small differences in the Net and VAT values on orders after the changes take effect. 

For example, a product that has a price of £1.95 will now have a VAT element of  £0.33 and a Net element of £1.62 (whereas previously the Net amount would have been listed as £1.63). 

If you are dealing with low value items you may see an increase in the VAT amount, e.g. for a product that cost £0.15 each the VAT element will now be calculated as £0.03 instead of £0.02.


Once an order is placed on your website, the ShopWired system stores a Net, VAT and Gross amount for each product in an order. We use these values when sending out order confirmation emails and in the generation of the order PDF (which many ShopWired customers use as a VAT invoice). 

Both the order confirmation email and the order PDF can be customised by you through the admin system if you wish to adjust the way that these figures are displayed or calculate new amounts based on mathematical formulas.