VAT – What is VAT?
Definition: VAT stands for value added tax and is a tax surcharge on the sales price of a good or service.
VAT is a tax that you pay when you buy goods and services in the UK including the European Union (EU). Where VAT is payable it's normally included in the price of the goods or service you buy or shown separately. Some goods don't attract VAT.
The standard rate of VAT in the UK from 04.01.11 is 20.0%.
Are you VAT registered?
If your business has annual sales below £68,000 (2009-10) you don't have to register for (and therefore charge) VAT.
There are many exceptions and special rules in tax laws and the law is updated frequently. You should be careful in both the accounting of input VAT and output VAT, so you do not accidentally book the VAT incorrectly. For more information contact your local VAT office or find more information online.