What is the VAT in UK?

Value-added tax (VAT) is a consumption tax levied on most goods and services sold in the United Kingdom. The standard VAT rate is 20%, but there are reduced rates of 5% and 0%. Some goods and services are exempt from VAT, including food, children's clothing, and books.

VAT is added to the price of goods and services before they are sold to the consumer. Businesses must register for VAT if their turnover exceeds a certain threshold, which is currently £85,000. Businesses that are registered for VAT must charge VAT on their sales and submit VAT returns to HM Revenue and Customs (HMRC) on a regular basis.

VAT is an important source of revenue for the UK government. In 2019-2020, VAT receipts totalled £133.7 billion, which accounted for 17% of the total tax revenue.