The 20% VAT in the UK That Every Foreign Tourist Should Know

Have you ever thought of how much the value-added tax or VAT in the UK is? Not all of us visiting the country are actually aware of how much the said tax is, but for us to understand VAT in the country, we need to spend some time, at least, doing research about it. That being said, reclaiming VAT might somehow make the topic more interesting.

To start up, the country’s VAT is around 20%, but the government can eventually adjust it into something lower or higher at times. Children’s stuff, for example, is not exempted with VAT; kids’ car seats have a 5% reduced tax rate. However, some goods like children’s clothing do not have VAT. What’s more confusing about this is that several goods in the UK at the moment do not have VAT, but these may have in other EU countries. Despite all that, the question of how much VAT you paid is still intriguing.

How to calculate VAT on purchased goods

The UK’s law states that if you buy goods from retail stores or catalogues, the declared price has already included the VAT amount, and no additional tax will be charged to you. But how do you basically do the math?

Because 20%, or 5% at some special types of goods, is already included in the retail price, the calculation is simple. You will only need to multiply the price by 0.1666, and that’s the tax amount. But it’s still easier to think of reclaiming VAT than solving math problems right?

An example calculation is when you purchased something for £120; VAT on the price is £20, which means you are buying an item worth £100 only. The VAT amount of £20 is 20% of £100 but only 16.6% of £120. So if you see the VAT value on the receipt of some expensive items you bought, that is just to inform you; it does not mean an extra charge.

How reclaiming VAT is done

Although the topic about VAT is complex and complicated, one interesting area about it is its refund. Usually, the simpler and easier ways of getting reclaims are on the affordable items. So you need to remember the following steps to claim your VAT refund.

  • The first thing you need to take note is finding stores with the VAT Refund Scheme. It’s not mandatory to have this in stores, but there are several ones in the UK that have this, which are famous with foreign tourists.
  • When you pay goods in these stores, the store owners or personnel will give you the VAT 407 form to fill out. You would need to present proof that you are eligible for the reclaim though; usually, passports are good. The store personnel or owners will also explain about the refund, and you need to understand all its terms and conditions.
  • When you leave the UK, you need to show the customs officials the documents you have about the refund for them to approve it. Once approved, they will inform the store owners who will process the refund.

Reclaiming VAT in the UK goes with a process just like others. So before you make arrangements with your visit to the country, you should know your rights on VAT refunds to make things a lot easier for you.