Value Added Tax (VAT) is a tax added to products and services by businesses who are VAT registered. VAT registration is mandatory for UK businesses whose VAT taxable turnover is more than a certain amount . It’s also possible to register for VAT voluntarily. There are three levels of VAT: Standard (20%) for most products and services Reduced (5%) for some things, such as kids car seats and home energy Zero (0%) for items such as newspapers, children’s clothes and crash helmets. VAT thresholds and rates are sometimes revised by the UK government.