VAT – An Overview
What is VAT?
VAT is an amount charged on most goods and services that are purchased in the UK and equivalent in Europe. A business registered for VAT will charge it on to other business and consumers in the UK. The good thing is that VAT registered business are able to recharge the amount of VAT that has been charged to them. The bad thing is that non-vat registered business and consumers are not able to claim back the VAT. Effectively it is a sale of good tax to consumers.
- Currently in the UK, there are three rates of VAT and an exemption rate:
- Standard rate VAT – is the one we know – at 20%
- Reduced rate VAT – mainly utilities – at 5%
- Zero rate VAT – being 0%