Output tax is the VAT a business charges on its own sales, while input tax is the VAT it pays on purchases and expenses; the difference between the two is what's paid to or reclaimed from HMRC.
Reclaiming input tax
Input tax can generally be reclaimed on purchases used for taxable business activities, provided a valid VAT invoice is held, though some costs like business entertainment and most cars are blocked.
Tax rules depend on individual circumstances and can change. This glossary is general information rather than personalised tax advice.