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how much is vat in uk

The standard VAT rate in the UK is currently 20%, and this has been the case since 4 January 2011. There are also lower and zero rates for certain goods and services.

Standard VAT rate (20%)

Most goods and services in the UK are charged at the standard rate of 20% VAT. This includes:

  • Clothing (except children’s clothes, which are usually zero‑rated)
  • Electronics, furniture, and household goods
  • Restaurant meals, hairdressing, and beauty treatments
  • Hotel accommodation and short‑stay rentals
  • Pay TV, mobile phone contracts, and many professional services

Businesses that are VAT‑registered must charge 20% on most of their sales unless a special rate applies.

Reduced VAT rate (5%)

A reduced rate of 5% applies to certain essential or socially beneficial items and services. Examples include:

  • Domestic fuel and power (electricity, gas, district heating, LPG, heating oil for homes)
  • Energy‑saving materials for homes (insulation, solar panels, heat pumps, etc.)
  • Children’s car seats
  • Some renovation and repair work on private homes
  • Certain social housing and some medical equipment for disabled people

This lower rate is meant to make these items more affordable for households.

Zero‑rated VAT (0%)

Some goods are taxed at 0% VAT, which is different from being exempt. Businesses still account for these on their VAT returns, but no VAT is charged. Common zero‑rated items include:

  • Most food and drink for human consumption (but not restaurant meals or alcohol)
  • Children’s clothes and shoes
  • Books, newspapers, and magazines
  • Water and basic utilities (in some cases)

Exempt and outside‑scope items

Some goods and services are completely exempt from VAT, meaning no VAT is charged and businesses cannot reclaim VAT on related costs. Examples:

  • Insurance, finance, and most banking services
  • Education and training (by eligible institutions)
  • Betting, lotteries, and gambling
  • Some property transactions (like long‑term residential leases)

When VAT applies

VAT is charged on most goods and services sold in the UK by VAT‑registered businesses. A business must register for VAT if its taxable turnover exceeds £90,000 in any 12‑month period (the 2025/26 threshold). Once registered, it must:

  • Charge VAT at the correct rate on its sales
  • Keep VAT records and submit VAT returns to HMRC
  • Pay the VAT collected (minus any VAT it has paid on business expenses)

Quick reference table

VAT rate| Applies to (examples)
---|---
20% (standard)| Most goods and services: clothing, electronics, restaurant meals, hairdressing, hotels, mobile contracts, etc. 139
5% (reduced)| Domestic fuel, energy‑saving home improvements, children’s car seats, some home repairs 1379
0% (zero‑rated)| Most food, children’s clothes, books, newspapers, magazines 139
Exempt| Insurance, finance, education, betting, some property 39

Information gathered from public forums or data available on the internet and portrayed here.