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Taxes
/ Value Added Tax (VAT) |
Value
Added Tax (VAT)
An
indirect tax levied on goods and services in the UK.
A company or trader registered for VAT pays suppliers VAT
additionally to the cost of goods or services purchased which is known
as input tax. Also VAT is
added to the sales cost of their product when invoicing customers which
is known as output tax. The difference between output tax and input tax
is payable to the government department, Her Majesty's Customs and
Excise.
There
are currently three rates of VAT:
- 17.5% - known as standard rated supplies; on most goods and services;
- 5% - known as reduced rate supplies; on fuel and power used in the
home and by charities.
- 0% - known as zero-rated supplies that you do not need to charge VAT
on. Some examples are: most food, books, newspapers and young
children’s clothing.
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