Glossary of commonly used VAT terminology

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Glossary of commonly used VAT terminology

The table below provides a glossary of the most common VAT terms used.

VAT termDescription
TaxableThis is a supply made by a business that is liable to VAT at either the zero rate, reduced rate or standard rate.
Output tax or output VATThis is the VAT charged by a supplier on supply of goods and services which are liable to VAT at either 5% or 20%.
Input tax or input VATThis is the VAT incurred by a business on purchases of goods and services associated with the business activities.
Please see the Claiming input tax guidance note
Non-deductible input taxIf a business makes exempt supplies, is involved in non-business activities or incurs VAT on items where HMRC has specifically 'blocked' input tax recovery, the irrecoverable VAT incurred is called non-deductible input tax.
Please see the Overview ― claiming input tax and Input tax ― business and non-business or private use guidance note

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