VAT in the United Kingdom: Rates, Rules & How to Calculate
The United Kingdom applies three VAT rates. The standard rate is 20%, covering most goods and services. The reduced rate of 5% applies to domestic fuel and power, children's car seats, certain energy-saving materials, and sanitary products. A zero rate (0%) applies to most food items, children's clothing, books, newspapers, public transport, and new residential construction. Some supplies are exempt from VAT entirely, including financial services, insurance, education, and healthcare.
HMRC (His Majesty's Revenue and Customs) administers UK VAT. Businesses must register for VAT when their taxable turnover exceeds 90,000 pounds (2024-25 threshold). VAT returns are generally filed quarterly through the Making Tax Digital (MTD) system. The UK uses the flat rate scheme for small businesses, allowing simplified VAT accounting at a fixed percentage of gross turnover.
Use our calculator to compute UK VAT instantly. For invoicing, try our invoice calculator. If you deal with US sales tax, use our sales tax calculator.