iPad UK Pricing revealed: may actually be cheaper to buy one in the UK

Apple has just revealed the UK pricing for the iPad. The 16GB, 32GB, and 64GB WiFi models will be sold for £429, £499, and £599, respectively. The 3G models will set you back another £100 (so £529/£599/£699).

In the US, the WiFi models are going for $499, $599, and £699 and the 3G models are $629, $729, and $829.

At first glance, if you perform a straight currency conversion, it appears that Rip-Off Britain is in full effect. A naïve currency exchange on xe.com (with the current exchange rate of 1 USD = 0.680831 GBP) reveals that the iPads should be sold for £339.26, £407.25, and £475.24 for the WiFi models and £427.65, £495.64, and £563.63 for the 3G models.

Thus, it appears (at first glance) that you could be paying anywhere from £90 to £135 extra for the privilege of buying an iPad in the UK. However, the numbers alone lie.

Factor 1: sales tax

The first thing to understand is that the US prices do not include sales tax, which could be as high as 8.25% if you're buying an iPad in California. Assuming that you are buying an iPad in California, the actual amount you're overpaying in the UK drops to about £60 to £90, depending on the model.

Factor 2: VAT

Whereas the US prices do not include sales tax, the UK prices do include VAT. If you are VAT registered, you can claim this back. When you factor in claiming 17.5% of the price back, an interesting thing happens: it actually becomes cheaper to purchase an iPad in the UK.

Thus, for a VAT registered business or individual, it's actually cheaper – anywhere from £13 to £42 – to buy an iPad in the UK than it is to buy one in California.