VAT is a type of tax that is added to goods and services - but what exactly do we pay it on?
We explain the bizarre things where VAT is added - and the things where it is not - as reports suggest the Treasury could scrap tax on private coronavirus tests.
Under current rules, holidaymakers face paying a 20% VAT charge on the at-home gold standard PCR tests.
But the Treasury is understood to be considering a tax exemption that would reduce the price to below £50, reports the Telegraph.
At the moment, the price of the tests can range from £60 to £300 per test.
The Treasury declined to comment on the possibility of an exemption when asked by the Mirror.
Here is what we do pay VAT on and what is exempt.
What do we pay VAT on?
The standard 20% rate of VAT - known as Value Added Tax - is paid on most goods and services.
For example, you will pay it on alcohol, tobacco, electronic goods and most clothing, apart from those for children and babies.
Any VAT due is already included in the price of something you buy in a shop - so you do not need to work it out before you pay.
For products in adverts and catalogues, the price of VAT may or not be included but this should be made clear.
If you are dining out, restaurants charge VAT on everything eaten in their premises and takeaways.
Takeaways are exempt from VAT if it is cold food, unless it is to be eaten in a designated area.
The standard rate of tax for restaurants is usually 20% but Chancellor Rishi Sunak has extended a reduced rate of 5% - brought in due to the coronavirus pandemic - until September 2021.
The same goes for other hospitality businesses including cinemas and theme parks.
If you are buying from a shop, most foods are exempt apart from alcohol, confectionery, crisps and savoury snacks, hot food, sports drinks, hot takeaways, ice cream, soft drinks and mineral water.
These are just some examples of where you will pay VAT. Other services and goods which are subject to tax include:
Not all businesses are charged at 20% - some have a lower rate of 5%.
What don’t we pay VAT on?
Products where you do not pay VAT include newspapers, magazines and postage stamps.
You also do not pay tax on sports activities and admission charges for cultural events such as museums and galleries.
Betting activities, including online gambling, lottery tickets and bingo, are exempt too, but gambling companies pay duties on any profits they make - we explain below.
Other services where you do not pay VAT include items purchased in charity shops and entry to charitable events.
Maternity pads and sanitary towels are also exempt, as are baby and children’s clothing.
Again, these are just some examples. You can see a full breakdown of which items are exempt on the Gov.uk website.
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Other taxes and duties
You pay different taxes or duties on:
You should note that airlines have to pay air passenger duty for every flight from the UK, and betting shops and gambling websites have to pay gambling duties on profits they make.