VAT is a tax you pay on most goods and services. You pay 20% VAT most of the time - but less on essential items.
|Rate||% of VAT||What the rate applies to|
|Standard||20%||Most goods and services|
|Reduced rate||5%||Some goods and services, eg children’s car seats and some energy-saving materials in the home|
|Zero rate||0%||Zero-rated goods and services, eg most food and children’s clothes|
Some things are exempt from VAT - eg postage stamps, some financial and property transactions.
How VAT is worked out
When someone charges you VAT they multiply their selling price by the VAT rate to calculate the amount of VAT to charge.
They then add this to the selling price to give you the price you actually pay - this is called the ‘gross’ price.
If a business doesn’t have a VAT number they’re not registered for VAT and must not charge VAT.
VAT and disabled people
You don’t have to pay VAT on certain goods and services if they’re just for your own use and you’re disabled or have a long-term illness.