As opposed to income tax and National Insurance Contributions (which are taxes on the money you earn), Value Added Tax (VAT) is a tax on the money you spend.

Different rates of VAT are applied to different types of goods and services (and some goods / services are exempt from VAT altogether).

This table shows the current VAT rates for goods and services (as of 2015-16 tax year).

Rate	% VAT paid	VAT rate applies to:
Standard	20%	Most goods and services
Reduced rate	5%	Some goods and services (including children's car seats and energy supplies)
Zero rate	0%	Zero-rated goods and services (including most food and children's clothes)

Changes in VAT

The rate of VAT in the UK has changed a number of times, since it was first introduced in 1973. Take a look at this chart to see the way VAT rates have changed.

As you can see, rates of VAT do change from time to time. When you are running a business, you need to make sure you are charging the correct VAT rate for the goods / services you offer. You must always check to make sure you're following the correct VAT guidelines.