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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. »Ê¹ÚÌåÓýappre are currently two positive rates: 20% and 5%. »Ê¹ÚÌåÓýapp reduced rate of 5% applies only to a limited range of specified supplies. »Ê¹ÚÌåÓýappre 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 £120 and the VAT rate is 20%, the tax is £20, that is 20% of £100, which with the £20 VAT equals the cash consideration.

For flat rate VAT schemes, see BIM31585.