VAT RATE UK – How much VAT you must charge?
If you are registered for VAT you have to charge VAT for your goods and services. VAT rate UK depends upon the type of goods and services you are providing. Get accurate VAT calculations using our free online UK VAT calculator. Our VAT tax calculator is designed to provide efficient and accurate results with just a few clicks.
Current VAT Rates in the UK
VAT rate changes over some time. There are three types of current VAT rates in the UK
- Standard rate 20%
- Reduce rate by 5%
- Zero rate 0%
Standard Rate
The standard VAT rate is 20% which is applied on most of the goods and services. When you purchase these goods and services 20% of the amount goes to VAT.
Change in VAT rate in the UK over the period
| YEAR | STANDARD VAT RATE |
| 1973 | 10% |
| 1974 | 12.5% |
| 1979 | 15% |
| 1991 | 17.5% |
| 2008 | 15% |
| 2010 | 17.5% |
| 2011 | 20% |
| 2012 | 12.5% |
| Present | 20% |
Reduce Rate
VAT reduction is 5% in the UK, which is the lowest amount of VAT charged on goods and services.
These reduced-rate goods and services include
Welfare
- Mobility aids for the elderly
- Smoking cessation products — nicotine patches and gum
Power
- Electricity for domestic and residential use or for non-business use by a charity
- Gas for domestic and residential use or for non-business use by a charity
- Heating oil for domestic and residential use or for non-business use by a charity
- Solid fuel for domestic and residential use or for non-business use by a charity
- Energy-saving materials
Protective and safety equipment
- Carrycots with restraint straps
- Children’s car seats, booster seats, and booster cushions
- Children’s safety seats with a bare-wheeled framework
Building and Construction
- Renovating a dwelling that has been empty for at least 2 years
- Converting existing premises by increasing the number of dwellings within the building
Heating equipment and connection of gas supply
- Closed solid fuel fire cassettes
- Electric dual immersion water heaters with factory-insulated hot water tanks
- Electric storage heaters
- Gas-fired boilers
- Gas room heaters with thermostatic controls
- Oil-fired boilers
- Radiators
- The installation, repair, and maintenance of a boiler, radiators, pipework, and controls forming a central heating system (including micro combined heat and power systems)
- The installation, repair, and maintenance of renewable source heating systems. This means space or water heating systems that use energy from renewable sources, including solar, wind, and hydroelectric power; or near renewable sources, including ground and air heat
- Connection or reconnection to the mains gas supply
For the people living in Northern Ireland reduced rate of energy-saving materials is 5%
Zero Rated
The Zero rate goods and services means that 0% VAT is applicable to them, which means the customer will pay 0% VAT on these goods and services, but the supplier can reclaim the VAT that was applied at the cost of making these supplies.
Zero-rate VAT supplies include:
Charities
- Advertising services for charities
- Certain goods sold at charitable fundraising events
- Charity shops — selling donated goods
- Construction and sale of new buildings for a relevant charitable purpose
Source:
VAT Notice 701/58, VAT Notice 708
Welfare
- Building services for disabled people
- Mobility aids for the elderly
- Equipment for blind or partially sighted people
- Equipment for disabled people
- Magnetic tape adapted for recording speech for blind people
Source:
Notice 701/7 VAT, VAT Notice 701/32
Health
- Dispensing of prescriptions by a registered pharmacist
- Incontinence products
- Maternity pads
- Sanitary protection products
- Low vision aids
Source:
VAT Notice 701/31, VAT Notice 701/57, VAT Notice 701/7, VAT Notice 701/18,
Utilities
- Cesspools, septic tanks, or similar (domestic) — emptying
- Sewerage services supplied to domestic or industrial customers
- Water supplied to households
Source:
Energy-saving materials installed in dwellings and buildings used for a relevant residential purpose
Installed Goods
- Air source heat pumps
- Boilers — wood-fueled
- Central heating and hot water controls
- Draught stripping
- Ground source heat pumps
- Insulation
- Microcombined heat and power units
- Solar panels
- Water and wind turbines
Source:
Building and construction, land and property
- Substantial reconstructions to protected buildings that are buildings used as a dwelling, for a relevant residential purpose, or for a relevant charitable purpose
- The installation of a bathroom or lavatory, constructing ramps, and widening doorways or passageways for disabled people in their own home
- Construction and first freehold or long leasehold sale of a new building for a relevant charitable purpose
- Construction and first freehold or long leasehold sale of a new building for relevant residential purposes
- Construction and first freehold or long leasehold sale of new domestic buildings
- First freehold or long leasehold sale of a commercial building converted into a dwelling or dwellings
- First freehold or long leasehold sale of buildings converted for relevant residential purposes
- First freehold or long leasehold sale of buildings converted for relevant charitable purposes
- Sale or long lease of a new dwelling with garage or parking space
Source:
VAT Notice 742, VAT Notice 708
Transport
- Aircraft repair and maintenance
Source:
VAT Notice 744C
Freight
- Freight transport to or from a place outside the UK
- Freight containers — sale, lease, or hire to a place outside the UK and the EU
- International freight transport that takes place in the UK and its territorial waters
Source:
VAT Notice 744B, VAT Notice 703/1, VAT Notice 744B
TRAVEL
- Passenger transport in a vehicle, boat or aircraft that carries not less than 10 passengers
Source:
VAT Notice 744A
Vehicles
- Aircraft repair and maintenance
- Airships — sale or charter
- Caravans (more than 7 meters long or more than 2.55 meters wide)
- Civil aero planes — sale or charter
- Helicopters — sale or charter
- Houseboats — sale or let out on hire
- Military airplanes — sale or charter
- Ship repairs and maintenance
- Shipbuilding — 15 tons or over gross tonnage
Source:
VAT Notice 744C
Printing
- Brochures
- Leaflets
- Pamphlets
Source:
VAT Notice 701/10
Publications
- Books
- Children’s painting and picture books
- Maps and charts
- Magazines
- Newspapers
- Printed or copied music
- Publications
Source:
VAT Notice 701/10
Clothing and footwear
- Babywear
- Children’s clothes and footwear
Source:
VAT Notice 714
Protective and safety equipment
- Cycle helmets — CE marked
- Motorcycle helmets that meet safety standards
- Protective boots and helmets for industrial use
Source:
Conclusion
In conclusion, a basic understanding of VAT rates in the UK, the standard rate of 20%, reduced rate of 5%, and zero rate of 0% can impact both businesses and customers. The standard applies to most goods and services while reducing the rate is beneficial to sectors like hospitality and energy. Zero-rate goods and services include sectors like children’s clothing and basic foods. Staying informed about these rates helps optimize financial planning.
FAQs
The standard VAT rate in the UK is currently 20%. It applies to most goods and services unless otherwise specified.
The reduced VAT rate in the UK is 5%, applicable to certain sectors like domestic fuel, energy, and some hospitality services.
Zero-rated items in the UK include children’s clothing, most food and drink, books, and certain medical supplies.
The VAT rate has varied from 10% in 1973 to 20% currently, with temporary reductions during economic downturns or specific circumstances.
The VAT rate was temporarily reduced to 15% from December 1, 2008, to December 31, 2009, as part of an economic stimulus package.
The reduced VAT rate of 5% was in effect from July 15, 2020, to September 30, 2021, for sectors like hospitality and attractions.
As of 2024, the VAT rate for hospitality services is 12.5%, which applies to food, drink, and accommodation services.
Small businesses may benefit from VAT exemptions or relief schemes, such as the VAT Flat Rate Scheme, depending on their annual turnover.
Online shopping in the UK is subject to the same VAT rates as physical stores, with standard, reduced, and zero rates applied according to the product category.
Yes, VAT rates directly impact pricing. Businesses must adjust their prices to reflect the applicable VAT rate, which can influence consumer purchasing decisions.
