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  Value Added Tax (VAT) is a tax that gets tacked onto the price of goods and services in the UK. The rate can vary depending on what you’re buying. Businesses act as collectors for HM Revenue & Customs (HMRC), gathering VAT and then paying it when they file their VAT returns. Getting a grip on how VAT operates is crucial for both consumers and businesses. It influences the final price shoppers see in stores and the tax figures that businesses have to manage when selling their products or services. In the UK, there are four primary VAT rates: Standard Rate: 20% Reduced Rate: 5% Zero Rate: 0% Exempt: No VAT charged For the 2025/26 tax year, the VAT registration threshold is set at £90,000. This means that businesses with a taxable turnover exceeding this amount need to register for VAT. What Are the Current UK VAT Rates? There are several  UK VAT rates  that depend on the type of item or service: Standard Rate (20%) This is the most frequently applied VAT rate and cove...

  In the world of business, VAT, or Value Added Tax, is a pivotal term that plays a significant role in financial transactions. Let’s delve into the basics of VAT and unravel its importance in the business landscape. What is VAT? Value Added Tax (VAT)  is a consumption tax imposed on goods and services at each stage of the production and distribution chain. It’s ultimately borne by the final consumer but collected at each stage of the supply chain. In simpler terms, it’s a tax on the value added to a product or service at every step of its production and distribution. The UK’s VAT system is designed to be transparent, ensuring that consumers are aware of the tax they are paying on the goods and services they purchase. This tax is a crucial revenue stream for the government, funding various public services and infrastructure projects. Who needs to register for VAT? Not every business needs to register for VAT, but if your taxable turnover exceeds a certain threshold, which is s...