You do - when you buy many goods, services and the like in the UK.
It's added onto the price. In 2006/2007, VAT - or value added tax - stands at 17.5%.
As such, it's an indirect tax in that you choose to buy goods and services. If you don't buy the goods or services, you don't stump up the VAT.
Many goods and services in the UK are exempt from VAT - loans and insurance, health and education services are prime examples of that.
Others are zero-rated, incurring 0% VAT, which means at some point in the future, they COULD be subject to a higher levy.
Zero-rated goods and services include food, clothes, books, medicines and so on.
So who has to register for VAT? Businesses, of course, supplying certain goods and services. That also includes the self-employed.
However, registration is NOT required if turnover - not profit - is £61,000, or less, per year.
And if you don't have to register, that means you needn't add 17.5% to the price of any goods or services offered - a real advantage!
However, if you do decide to register, even if turnover is less than £61,000, you can reclaim the VAT added to expenses necessary for the running of your business.
So it's up to you. Depending on your situation, there are advantages and disadvantages. So check out all the possibilities with a professional financial adviser.
