UK VAT rates
There are three rates of VAT in the United Kingdom, and a separate category of supplies that are exempt altogether.
| Rate | Percentage | What it applies to |
|---|---|---|
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Some goods and services, for example children's car seats and home energy |
| Zero rate | 0% | Zero-rated goods and services, for example most food and children's clothes |
The standard rate rose to twenty per cent on 4th January 2011, from seventeen and a half per cent. Some things are exempt from VAT altogether, such as postage stamps and financial and property transactions.
Zero-rated is not the same as exempt
This distinction causes more confusion than any other part of the system, and it matters. A zero-rated sale is a taxable sale on which the rate happens to be nothing. An exempt sale is outside the tax altogether. The practical difference is that zero-rated sales count towards taxable turnover for the registration threshold and allow the VAT on related purchases to be reclaimed, whereas exempt sales do neither. A baker selling ordinary bread makes zero-rated sales and can reclaim the VAT on the oven; an insurance broker makes exempt sales and generally cannot.
Everyday examples
| Treatment | Typical examples |
|---|---|
| Standard rate, 20% | Most goods and services, professional fees, adult clothing, alcohol, confectionery, hot takeaway food |
| Reduced rate, 5% | Domestic gas and electricity, children's car seats, certain energy-saving materials, some residential conversions |
| Zero rate, 0% | Most food, books and newspapers, children's clothes and shoes, public transport, new residential building work |
| Exempt | Insurance, most finance and credit, postage stamps, most education and training, many health services |
Figures checked against GOV.UK on 18th September 2026.