Definition:
VAT is the tax payable on all goods and services in the UK, rated as 17.5% till end 2009. From 4 January 2010 the rate will increase to 20%.
On shop-bought goods the tax is included so you do not need to add it to the price displayed. If a bottle of water is priced at 75p then 75p is what you will pay the shopkeeper.
For larger, more expensive purchases you may see the breakdown of goods/service price, then the VAT price, then the total payable.
Find out more from DirectGov - the official UK government website for citizens.
Also Known As: Value Added Tax
Alternate Spellings: V.A.T.
