Vat
Glossary
VAT
Value Added Tax (VAT) is a UK consumption tax charged on most goods and services, payable to HMRC by VAT-registered businesses on their sales (less VAT they've paid on their own purchases).
The standard rate is 20%, with reduced rates of 5% (e.g. domestic energy) and 0% (e.g. most food, children's clothing) on specific categories. The compulsory VAT registration threshold is £90,000 of taxable turnover over a rolling 12 months, although businesses can register voluntarily below this. Once registered, you charge VAT on your sales, reclaim VAT on your purchases, and submit VAT returns (usually quarterly) through Making Tax Digital-compatible software.
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