Value Added Tax, more commonly known as VAT, is a tax that you have to pay when you purchase goods or services within the European Union, including the UK. When you are charged VAT, for example when you buy an item in a shop, you will usually not notice this as it will have been factored into the total price of the item on the price tag. However, shops will sometimes show the VAT on their sales receipts, meaning that when you look at your receipt, you'll see that the shop has taken the original price of the item (the 'net' price) and added 17.5% on top. This leaves the 'gross price', which is the price that you pay. You will never be charged extra tax at the till. More info
There are 3 different rates of VAT, the standard rate, the reduced rate and zero rate. Most goods are charged at the standard VAT rate, which is currently set at 17.5%. Although the government temporarily reduced the standard VAT rate from 17.5% to 15% to encourage people to start spending again in the shops, the rate reverted back to 17.5% on the 1st January 2010. The reduced rate of VAT is set on things like children's car seats and domestic fuel and power. You pay 0% VAT (zero rate) on food, children's clothes and books, newspapers and magazines. Less