UK VAT Rates 2026
Value Added Tax (VAT) is a consumption tax charged on most goods and services sold in the UK. This guide explains the current VAT rates and when they apply.
Current VAT Rates
| Rate | Percentage | Applies To |
|---|---|---|
| Standard Rate | 20% | Most goods and services |
| Reduced Rate | 5% | Some goods and services |
| Zero Rate | 0% | Zero-rated goods and services |
Standard Rate (20%)
The standard VAT rate of 20% applies to most goods and services, including:
- Electronics and electrical goods
- Clothing and footwear
- Alcohol and tobacco
- Restaurant meals (eat-in)
- Professional services
- Most business services
Reduced Rate (5%)
The 5% reduced rate applies to:
- Domestic fuel and power (gas and electricity)
- Energy-saving materials for homes
- Children's car seats
- Mobility aids for elderly
- Smoking cessation products
- Sanitary protection products
- Contraceptives
Zero Rate (0%)
Zero-rated goods and services include:
- Most food (except hot takeaways and restaurant meals)
- Books, newspapers, and magazines
- Children's clothing and footwear
- Public transport
- New residential property construction
- Exports outside the UK
- Prescription medicines
- Charity shops selling donated goods
VAT-Exempt Goods and Services
Some items are exempt from VAT entirely:
- Insurance
- Finance and credit
- Education and training (by eligible bodies)
- Health services by registered professionals
- Burial and cremation services
- Membership subscriptions to certain organisations
- Postal services by Royal Mail
VAT Registration Threshold 2026/27
| Threshold | Amount |
|---|---|
| Compulsory Registration | £90,000 |
| Voluntary Registration | Any turnover |
| Deregistration | Below £88,000 |
You must register for VAT if:
- Your VAT taxable turnover exceeds £90,000 in any 12-month period
- You expect to exceed £90,000 in the next 30 days alone
Benefits of Voluntary Registration
Even if below the threshold, you might benefit from voluntary registration:
- Reclaim VAT on business purchases
- Appear more established to customers
- Required if selling to VAT-registered businesses
VAT Return Deadlines
Most businesses submit quarterly returns with the following deadlines:
- Return due: 1 month and 7 days after quarter end
- Payment due: Same deadline as return
Making Tax Digital (MTD): All VAT-registered businesses must use MTD-compatible software.
VAT Calculation Example
Sale price: £1,200 (including VAT at 20%)
- Net amount: £1,000
- VAT: £200
To calculate VAT from gross: Gross ÷ 1.20 × 0.20 = VAT amount £1,200 ÷ 1.20 × 0.20 = £200
Common VAT Mistakes to Avoid
- Missing the registration deadline - Register within 30 days of exceeding threshold
- Incorrect rate applied - Research the correct rate for each product/service
- Poor record keeping - Keep all VAT invoices for 6 years
- Late submissions - Set reminders for deadlines
Use Our VAT Calculator
Calculate VAT quickly and accurately with our VAT Calculator - add or remove VAT instantly at any rate.
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Waqas Sagar
ACA, FCCA, FMAAT - Chartered Accountant
Waqas is a Chartered Accountant regulated by ICAEW, ACCA and AAT with 18+ years of UK tax experience. He is the founder of Accotax, a London-based accountancy firm serving over 1,200 clients.
Accuracy Note
This information is for guidance only and is based on 2026/27 tax year rates. Tax rules are complex and your circumstances may differ. For personal advice, consult a qualified accountant or tax adviser.