Value-added tax (VAT) is a tax levied on most goods and services in the UK. It plays a vital role in funding public services. The standard VAT rate is 20%, but there are also reduced rates for specific items.
Businesses charge this tax when they sell goods or services to customers, but it can also be charged on imported goods. The VAT charged on imported goods is called Import VAT and the process of collecting it is different.
UK businesses include VAT in the price of eligible goods and services, so customers will usually pay VAT at the point of sale. After it is paid, businesses will forward the VAT amount to HMRC.