Define: Value Added Tax

UK Accounting Glossary

Definition: Value Added Tax


Quick Summary of Value Added Tax


The Value Added Tax, or VAT, in the European Union is a general, broadly based consumption tax assessed on the value added to goods and services.




What is the dictionary definition of Value Added Tax?

Dictionary Definition


Value Added Tax (VAT) is a charge on the taxable supplies of goods and services made in the UK by a taxable person in the course or furtherance of a business.

Where appropriate, a trader adds VAT to sales and must account to HMRC for the output tax.

The input tax paid on purchases can be deducted from the output tax due.

VAT, indirect taxation that falls on the final customer, was introduced in 1973 when the UK joined the European Economic Community (ECC).

Unless they are zero-rated goods and services, exempt supplies or special rates goods, all goods and services in the UK are currently taxed at a rate of 20%.


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Definition Sources


Definitions for Value Added Tax are sourced/syndicated from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • BusinessDictionary.com
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 4th May 2019.