BIM31505 - VAT: rate

VAT is charged at a specified positive rate or at a zero rate on the value of the supplies of goods and services within the charge. There is also provision for the supply of some categories of goods and services to be exempt from VAT.

Where, as is normally the case, the consideration for the goods and services is a monetary consideration, the value on which the appropriate percentage is charged is the amount which, with the VAT, equals the cash consideration. This means that if the cash consideration is £117.50 and the VAT rate is 17.5%, the tax is £17.50, that is 17.5% of £100, which with the £17.50 VAT equals the cash consideration.

For flat rate VAT schemes see BIM31585.