The UK has three VAT rates: the standard rate of 20%, the reduced rate of 5% and the zero rate of 0%. Every taxable supply falls into one of them, and a supply is standard rated unless the law specifically puts it in the reduced rate schedule, the zero rate schedule or the exemption schedule. Exempt supplies are not a fourth rate; they are outside the taxable regime altogether.

What are the current UK VAT rates?

Rate Percentage Where the law sets it Typical examples from HMRC
Standard 20% Section 2(1) VATA 1994 Most goods and services
Reduced 5% Section 29A and Schedule 7A Children’s car seats, domestic fuel and power
Zero 0% Section 30 and Schedule 8 Most food, children’s clothes, books
Exempt No VAT Section 31 and Schedule 9 Insurance, finance, postage stamps, many property transactions

The standard rate has been 20% since 4 January 2011, when it rose from 17.5%. HMRC’s VAT guide (Notice 700, paragraph 3.3.1) records the full history: VAT started at 10% on 1 April 1973, and the reduced rate began at 8% for fuel and power on 1 April 1994 before moving to 5% on 1 September 1997. The zero rate has existed throughout. All of these rates apply equally in 2026 to 2027.

How does the law decide which rate applies?

The structure of the Value Added Tax Act 1994 works by exception. Section 2(1) charges VAT at 20%, subject to section 29A. Section 29A(1) charges 5% on supplies described in Schedule 7A. Section 30(2) zero rates supplies described in Schedule 8, and section 30(1) says that a zero rated supply bears no VAT but is treated in all other respects as a taxable supply. Section 31(1) makes a supply exempt if it falls within Part 2 of Schedule 9. Anything not caught by one of those schedules is standard rated. Notice 700, paragraph 29.1, puts it plainly: if a supply is not zero rated or exempt, it is standard rated or reduced rated, and VAT must be charged.

The Treasury can change the schedules by order (sections 29A(3), 30(4) and 31(2)). Under section 2(2) it can also vary the standard rate by up to 25% of the rate by order, but such an order lapses after one year unless renewed.

What does the reduced rate cover?

The 5% rate applies to a limited list in Schedule 7A. Notice 700, paragraph 29.3, and HMRC’s guide to VAT rates on different goods and services include:

  • gas, heating oil, solid fuel and electricity for domestic and residential use, or non business use by a charity (business fuel is usually standard rated; VAT Notice 701/19)
  • children’s car seats, booster seats and booster cushions (VAT Notice 701/23)
  • installation of certain heating equipment, such as boilers and central heating, and renewable source heating systems (VAT Notice 708/6)
  • certain mobility aids supplied and installed for a customer aged 60 or over in their own home
  • some residential conversion work (VAT Notice 708)
  • smoking cessation products and some contraceptive products, in the circumstances described in VAT Notice 701/57

Reduced rate supplies are taxable, so the supplier can recover input tax on related costs in the normal way (Notice 700, paragraph 3.4).

What does the zero rate cover?

Schedule 8 lists zero rated supplies, and Notice 700, paragraph 29.2, points to the notice for each area. Common examples are:

  • Food: food for human consumption is usually zero rated, but HMRC lists items that are always standard rated, including catering, alcoholic drinks, confectionery, crisps and savoury snacks, hot food, sports drinks, ice cream, soft drinks and mineral water (VAT Notice 701/14 and, for catering and takeaways, VAT Notice 709/1).
  • Books and printed matter: books, newspapers and children’s picture books are zero rated, while items such as exercise books, letterheads and posters are standard rated (VAT Notice 701/10).
  • Young children’s clothing and footwear (VAT Notice 714).
  • Exports of goods outside the UK, subject to conditions and evidence (VAT Notice 703).
  • Construction of new dwellings and the sale or long lease of new homes (VAT Notice 708).
  • Sanitary protection products, shown at 0% in HMRC’s rates guide (VAT Notice 701/18).
  • Energy saving materials installed in residential accommodation and certain charitable buildings, which HMRC’s rates guide shows at 0% until 31 March 2027 (VAT Notice 708/6).

Zero rating is not the same as exemption even though no VAT appears on the invoice. The consequences for input tax and registration are set out in zero rated vs exempt supplies.

How do you find the correct rate for a supply?

HMRC’s guide to VAT rates on different goods and services is the starting point, but it says it is not a complete list. It also warns that a rate may depend on who is supplying or buying, where the supply is made, how the goods are presented for sale, their precise nature, whether the right evidence and records are held, and whether they are supplied with other goods or services.

A practical order of work is:

  1. Identify what is actually being supplied, including whether it is one supply or several.
  2. Check Notice 700, section 29, which lists the areas where supplies may be zero rated, reduced rated or exempt and names the relevant notice.
  3. Read that notice in full, including its conditions and evidence requirements.
  4. If the answer is still unclear, Notice 700 says not to guess and to call the VAT general enquiries helpline. Where there is genuine uncertainty about how the law applies, a business can ask for written advice through HMRC’s non statutory clearance service, which HMRC says is taking around 12 weeks for VAT requests.

What if one price covers items at different rates?

Notice 700, paragraph 8.1, distinguishes a single composite supply, which takes one rate, from a multiple supply of separate items sold for one price. For a multiple supply at different rates, the price must be split between the elements. There is no prescribed method, but the calculation must be fair and the business must be able to justify it (paragraph 8.1.1). Apportionment must not be used where the elements form a single, indivisible supply; HMRC’s example is a launderette, which makes one standard rated supply of washing and drying rather than separate supplies of water, heat and machine use.

Illustration only. A shop sells a gift hamper for £60 including VAT. It contains zero rated food and a bottle of wine, which is standard rated. Using a fair cost based split, the shop attributes £36 of the price to the food and £24 to the wine. The VAT is one sixth of £24, which is £4. Charging 20% VAT across the whole £60 would overstate output tax at £10.

What happens when a rate changes?

VAT is due at the rate in force at the tax point (Notice 700, paragraph 14.1), so the date of invoice, payment or delivery decides which rate applies around a change. Section 30 of Notice 700 covers changes in rate and liability in detail. Rates do change for short periods: HMRC’s rates guide records a temporary reduced rate for certain children’s meals, children’s admission tickets and family attractions from 25 June 2026 to 1 September 2026. Supplies with tax points after that period are back at their normal rate.

What mistakes come up most often?

  • Assuming a product is zero rated because a similar product is. Food, printed matter and construction all have detailed boundaries.
  • Applying the domestic fuel rate to business premises.
  • Treating exempt sales as zero rated, which wrongly opens up input tax recovery.
  • Splitting a single composite supply into parts to apply a lower rate to one element.
  • Missing the end of a temporary rate and continuing to charge it.

Errors in the rate charged are corrected under the rules described in correcting VAT errors, and rate questions often come up in an HMRC VAT compliance check. For the mechanics of charging and reclaiming VAT, see how VAT works.

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Sources

Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.