VAT Questions and Answers
In this section of the website we answer the most frequently asked questions regarding the UK VAT system. If you have a question you would like answered on this page please feel free to submit it via our contact page.
What is VAT? VAT stands for Value Added Tax and is charged upon purchase of most goods and services in the United Kingdom. The current VAT rate for the UK currently stands at 20% and has been since the 4th January 2011. There have been just 3 changes to the VAT rate since 1991. A global recession prompted a temporary reduction to 15% on the 1st December 2008 which lasted until the 1st January 2010, the VAT rate was then returned to the ever familiar 17.5% however on the 4th January 2011 the rate was raised to 20% following a coalition government emergency budget and has remained there ever since.
Random VAT Facts 1. VAT was introduced as a European replacement for the old purchase tax. This was charged at differing rates according to the luxury of an item.2. The interpretation of tax law on food has lead to some very high profile court cases including the famous 'pastygate' affair and also the Jaffa Cakes brand taking matters to a tribunal to argue that they should be classified as a 'chocolate covered cake' (0% VAT) as opposed to a 'chocolate covered buscuit' (20% VAT)3. When a UK business's taxable turnover exceeds £85,000 in a 12 month period it is require to become VAT registered. source