VAT rates
| Rate | % | Applies to |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Domestic fuel and power, children’s car seats, some energy-saving materials |
| Zero | 0% | Most food, children’s clothes, books and newspapers |
Some supplies are exempt, such as postage stamps and most financial and insurance transactions.
Getting started
- Register for VAT if taxable turnover goes over £90,000 in a rolling 12-month period.
- Keep good records so invoices show the rates used and support input tax claims.
- Stay up to date, as rates and temporary reliefs can change.
Output VAT is what you charge on sales. Input VAT is what you pay on purchases.
Charging and reclaiming VAT
Add VAT at the correct rate to invoices, showing your VAT number and the total VAT. You can usually reclaim input VAT on business purchases, keeping valid invoices as evidence. VAT returns are usually filed quarterly, and if input VAT exceeds output VAT you can reclaim the difference.
FAQs
Frequently asked questions
What is the standard VAT rate?
20%, applying to most goods and services sold in the UK.
What is zero-rated VAT?
Goods and services that are taxable but charged at 0%, such as most food, children’s clothes and books.
Who has to register for VAT?
Businesses whose taxable turnover goes over the threshold. You can also register voluntarily.