What is the current VAT rate in the UK?
The standard rate of VAT in the UK is 20%. It has been 20% since 4 January 2011, when the government raised it from 17.5%. That means VAT is charged at 20% on most goods and services sold in the UK — from a laptop to a restaurant meal to a plumber's labour.
The rates are set by law and published by HMRC in the GOV.UK VAT rates guidance. The standard rate is the default: if a good or service is "standard-rated", you pay 20% VAT on it. The two other rates — reduced and zero — apply only to the specific items listed in the sections below.
What are the three VAT rates in the UK?
The UK has three rates of VAT. Think of them as tiers: the standard rate catches almost everything, while the reduced and zero rates are narrow exceptions HMRC has carved out for specific goods and services.
| Rate | Called | Covers |
|---|---|---|
| 20% | Standard rate | Most goods and services: electronics, clothes for adults, restaurant meals, alcohol, professional services, repairs |
| 5% | Reduced rate | Domestic fuel and power, children's car seats, energy-saving installations, some renovation work, mobility aids |
| 0% | Zero rate | Most food, children's clothes and shoes, books and newspapers, public transport fares |
One common confusion: zero-rated is not the same as VAT-exempt. Zero-rated goods are still within the VAT system at a 0% rate, which matters for businesses reclaiming VAT. VAT-exempt items — like insurance, finance and education — sit outside the system entirely. Shoppers pay no VAT either way.
Which goods and services are zero-rated (0% VAT) in the UK?
Zero-rated goods carry a 0% VAT rate — you pay the shelf price and nothing is added. The main categories HMRC lists at the zero rate are:
- Most food and drink — groceries from a supermarket carry no VAT. But there are famous exceptions: hot takeaway food, restaurant and café meals, alcohol, confectionery, crisps and soft drinks are all standard-rated at 20%.
- Children's clothes and shoes — clothes sized for young children are zero-rated. The same garment in an adult size is standard-rated at 20%.
- Books, newspapers and magazines — printed books and periodicals are zero-rated, as are e-books since the rate was extended to digital publications.
- Public transport fares — bus, train and domestic flight tickets are zero-rated.
The food boundary is the one that trips people up: a plain sandwich from a shop is zero-rated, but the same sandwich served hot in a café is standard-rated at 20%. The rule HMRC applies is about how and where the food is supplied, not just what it is.
What does the 5% reduced VAT rate cover?
The 5% reduced rate is a middle tier that keeps VAT low on essentials and socially useful spending. The main items HMRC charges at 5% are:
- Domestic fuel and power — gas and electricity for your home are charged at 5%, not 20%.
- Children's car seats — including booster seats.
- Energy-saving installations — installing insulation, draught-proofing or solar panels in a home qualifies for the 5% rate on the labour and materials.
- Some building work — renovating a home that has been empty for two years or more, and certain conversions, are charged at 5%.
- Mobility aids for older people — specified equipment for people aged 60 or over.
Everything not on the reduced or zero lists falls back to the standard 20%. If you are unsure which rate applies to something you sell, the official GOV.UK VAT rates guidance lists goods and services category by category.
How do I calculate VAT on a price?
There are two directions: adding VAT to a net price, and extracting VAT from a price that already includes it. Worked examples at the 20% standard rate:
Adding VAT to a net price
A freelancer quotes £100 for a job. VAT at 20%:
£100 × 1.20 = £120
The client pays £120; the VAT portion is £20. The shortcut: multiply any net price by 1.20.
Extracting VAT from a gross price
A shop receipt shows £120 including VAT. The VAT inside it:
£120 ÷ 6 = £20 VAT, so the net price is £100.
Why divide by 6? Because 20/120 simplifies to 1/6. (The general rule: divide the gross price by 1 plus the rate as a decimal — here 1.20 — to get the net.)
The most common mistake is subtracting 20% from the gross price to remove VAT: 20% off £120 is £96, not £100. Always divide by 1.20 (or by 6 for the VAT amount) instead. Our VAT Calculator does both directions instantly, and the UK VAT Calculator runs the same maths at the UK rates.
Is VAT included in UK shop prices?
Yes — the price you see on a UK shop shelf or website is the price you pay. UK consumer law (the Price Marking Order) requires retailers selling to the public to show VAT-inclusive prices, so the 20% is already baked in. When a receipt shows a £120 total, £100 is the goods and £20 is the VAT — the "extracting VAT" example above.
Business-to-business quotes are the exception: trade suppliers usually show prices excluding VAT ("ex VAT") because their business customers can reclaim it. If you are a freelancer or small business quoting a client, say explicitly whether your quote includes VAT — most disputes about VAT start with that ambiguity.
When do UK businesses have to register for VAT?
A UK business must register for VAT once its taxable turnover passes £90,000 in any 12-month period — the VAT registration threshold, which HMRC raised from £85,000 on 1 April 2024. Below that level, registration is optional: some small businesses register voluntarily so they can reclaim VAT on their costs, especially if most of their customers are VAT-registered businesses.
Registering means charging 20% VAT on your sales, filing VAT returns (usually quarterly) and reclaiming the VAT on your business purchases. If you are approaching the threshold, the decision and the paperwork matter — but the rate you will charge is the straightforward part: 20% standard unless your goods fall into the reduced or zero lists above.
Frequently asked questions
How much is VAT on a £100 item in the UK?
£20. At the 20% standard rate, £100 × 1.20 = £120, so the VAT portion is £20 and the customer pays £120. If the item is zero-rated (for example most groceries or a children's coat), the VAT is £0.
When did UK VAT go up to 20%?
On 4 January 2011, when the standard rate was raised from 17.5% to 20%. The rate has been 20% ever since. Before 17.5% it had been 15% for a period, but the 2011 rise is the one that set the current rate.
Do I pay VAT on food in the UK?
Usually not. Most groceries are zero-rated at 0% VAT. But hot takeaway food, restaurant and café meals, alcohol, confectionery, crisps and soft drinks are standard-rated at 20% — which is why a cold supermarket sandwich has no VAT while a hot café sandwich does.
What is the 5% reduced VAT rate for?
Mainly domestic gas and electricity for your home, children's car seats, energy-saving installations such as insulation, certain renovation work on long-empty homes, and mobility aids for people aged 60 or over.
Is there VAT on children's clothes in the UK?
No. Children's clothes and shoes are zero-rated at 0% VAT. The same style of garment in an adult size is standard-rated at 20% — the rate depends on the size range, not the design.
How do I check how much VAT is included in a price?
Divide the VAT-inclusive price by 6 at the 20% standard rate — that is the VAT amount, because 20/120 simplifies to 1/6. For example, £120 ÷ 6 = £20 VAT, leaving a £100 net price. The free VAT Calculator does this instantly in both directions.
Does the UK still charge VAT after Brexit?
Yes. The UK kept its own VAT system after leaving the EU, with the same three rates: 20% standard, 5% reduced and 0% zero. Brexit changed the VAT rules for imports, exports and some cross-border services, but the domestic rates shoppers pay are unchanged.
The 30-second version
- Standard rate: 20% on most goods and services, unchanged since 4 January 2011 (HMRC).
- Reduced rate: 5% for home energy, children's car seats and specified building work.
- Zero rate: 0% for most food, children's clothes and books.
- To add VAT: multiply by 1.20. To extract VAT from a VAT-inclusive price: divide by 6.
- Shop prices already include VAT; business quotes usually do not — ask which one you are looking at.
Want the general maths behind these rates? Read the full VAT calculator guide or run the numbers in the free VAT Calculator.