Value Added Tax (VAT)

Value added tax (VAT) is currently due on supplies of UK goods or services that are made or undertaken in the course of business by a registered business.

VAT is levied at the standard rate of 17.5 per cent and in 2004 all businesses that had a turnover of £58,000 were required to be registered.

For some goods and services, VAT is applied at the reduced rate of five per cent (eg: supplies of domestic fuel or power, children's car seats, residential conversions), while a number of goods and services are zero rated in terms of VAT (eg: food, medicines, children's clothes, transport and books).

Other things have a reduced rate of income tax – these include "smoking cessation aids" such as nicotine gum and for a specified list of alterations to housing, to support the needs of older people.

VAT is collected by HM Customs and Excise on a quarterly basis from registered businesses, each of whom are required to complete a VAT return

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