Introduction to VAT

What is VAT?

VAT is a tax that's charged on most business transactions in the UK. Businesses add VAT to the price they charge when they provide goods and services to:

  • business customers - for example, a clothing manufacturer adds VAT to the prices they charge a clothes shop
  • non-business customers - members of the public or 'consumers' - for example, a hairdressing salon includes VAT in the prices they charge members of the public

If you're a VAT-registered business, in most cases you:

  • charge VAT on the goods and services you provide
  • reclaim the VAT you pay when you buy goods and services for your business

If you are not VAT-registered then you cannot reclaim the VAT you pay when you purchase goods and services.

Subjects covered in this guide

Developed with:
HM Revenue & Customs