UK VAT Rates: Standard 20%, Reduced 5% & 0%

Value Added Tax (VAT) is the UK's main consumption tax.

Rates

• Standard (20%): Most goods/services.
• Reduced (5%): Domestic fuel/power, children's car seats, energy-saving materials, mobility aids for elderly.
• Zero (0%): Most food, children's clothing/footwear, books/newspapers, prescription drugs, new residential construction, public transport.

Exempt (No VAT Charged, No Input Credit)

Financial services, insurance, education, health, postal services, betting/gaming.

Registration Threshold

Businesses must register if taxable turnover exceeds £85,000 (2024/25). Voluntary registration allowed below threshold.

Revenue Significance

VAT raised £133.7B in 2019/20 (17% of total tax receipts), making it the third-largest revenue source after Income Tax and NICs.