The Short Answer

The standard rate of VAT in the UK is 20%. That's the rate applied to most goods and services, and it's the figure most people mean when they ask "how much is VAT." But it's not the only rate - there's a 5% reduced rate and a 0% zero rate for specific categories, plus some things that are exempt altogether. Which one applies depends entirely on what's being sold.

VAT rates and rules are set by the government and can change at a Budget. The figures in this guide are current at the time of writing - for anything with real money riding on it, confirm the current rate on GOV.UK or with an accountant.

The Three UK VAT Rates

Standard rate: 20%

The default. If something isn't specifically listed as reduced-rate, zero-rated or exempt, it's charged at 20%. This covers the vast majority of everyday purchases and services: electronics, adult clothing, furniture, restaurant meals, professional services like consultancy or design, most software, and so on. The standard rate has been 20% since January 2011.

Reduced rate: 5%

A limited list of goods and services get a lower rate. The most common examples people encounter:

  • Domestic gas and electricity (with a 2026 change to electricity - see below)
  • Children's car seats
  • Certain energy-saving materials installed in homes
  • Some residential property conversions and renovations

Zero rate: 0%

These items are technically subject to VAT, but at a rate of zero. It sounds like a technicality, but it matters (explained below). Common zero-rated items:

  • Most food and drink for home consumption (but not restaurant meals, alcohol, confectionery or crisps, which are standard-rated)
  • Children's clothing and footwear
  • Books, newspapers and magazines, including digital versions
  • Public transport fares - buses, trains, and similar
  • Prescription medicines
  • New-build residential housing

Zero-Rated vs. Exempt: Why the Difference Matters

Alongside the three rates, some things are exempt from VAT entirely - insurance, most financial services, education, healthcare, and postage stamps, among others. On a receipt, "zero-rated" and "exempt" both look like "no VAT charged," but for a business they're very different.

If you sell zero-rated items, you're inside the VAT system at 0% - which means you can still reclaim the VAT you paid on your own business costs. If you sell exempt items, you're outside the system for those sales, and generally can't reclaim VAT on the costs that relate to them. For a business owner, being zero-rated is usually much better than being exempt.

Worked Examples

A 100 pound item at the standard 20% rate

  • VAT: 100 x 0.20 = 20 pounds
  • Total the customer pays: 120 pounds

A 300 pound gas bill at the 5% reduced rate

  • VAT: 300 x 0.05 = 15 pounds
  • Total: 315 pounds

A 40 pound children's coat at the 0% zero rate

  • VAT: 40 x 0 = 0 pounds
  • Total: 40 pounds

Working backwards from a VAT-inclusive price uses a different method - dividing rather than subtracting - which most people get wrong on the first try. We cover it in how to work out VAT backwards.

A 2026 Change Worth Knowing: VAT on Electricity

From 1 October 2026, VAT on domestic electricity is being cut from 5% to 0% as a temporary cost-of-living measure, currently due to run until 31 March 2027. Domestic gas stays at 5%. The government estimated the saving at around 45 pounds a year for a typical household.

A few practical details:

  • It applies to household electricity - both unit rates and standing charges
  • It covers fixed tariffs as well as variable ones
  • Most business electricity is not included and stays at the standard 20%
  • Because it's temporary, whether it continues beyond March 2027 is a decision for a future Budget

If you're reading this after the measure has ended or been extended, check GOV.UK for the current position - this is exactly the kind of rate that shifts.

Is VAT the Same Across England, Scotland, Wales and Northern Ireland?

Yes. VAT is a UK-wide tax set by the UK government, so the rates are identical whether you're in England, Scotland, Wales or Northern Ireland. Searching for "VAT in England" gives you the same answer as "VAT in the UK." The one nuance is that Northern Ireland has some special arrangements for goods trade with the EU, but the rates themselves don't differ.

When Does a Business Have to Charge VAT?

Only VAT-registered businesses charge VAT. Registration becomes compulsory once a business's taxable turnover passes the registration threshold in any rolling 12-month period - currently 90,000 pounds. Below that, a business can choose to register voluntarily but doesn't have to. This is why some small businesses charge VAT and others don't, and both can be entirely legitimate.

If you're approaching the threshold or thinking about registering, we cover the process in how to register for VAT as a UK small business.

Common Mistakes

  • Assuming everything is 20%. Food, children's clothes, books and transport are the big everyday exceptions.
  • Treating "exempt" and "zero-rated" as the same. For a business, they have very different consequences for reclaiming VAT.
  • Applying the wrong rate to mixed items. A shopping basket with both standard-rated and zero-rated goods needs each rate applied to the right items.
  • Charging VAT without being registered. If a business isn't VAT registered, it shouldn't be adding VAT at all.

Calculate VAT Instantly With WaqarWeb

The VAT Calculator handles all three rates - pick 20%, 5% or 0%, enter a price, and it adds or removes VAT instantly with the breakdown shown clearly. If you're producing invoices, the Invoice Generator applies whichever rate you set and shows net, VAT and gross as separate lines.

Frequently Asked Questions

Has the UK VAT rate changed in 2026?

The three main rates - 20%, 5% and 0% - are unchanged. The notable 2026 change is the temporary cut of VAT on domestic electricity from 5% to 0% from 1 October 2026.

Is VAT charged on food?

Most food bought for home consumption is zero-rated. But there are well-known exceptions charged at 20%: hot takeaway food, restaurant meals, alcohol, confectionery, crisps, and soft drinks. The line between them can be surprisingly specific.

Is VAT charged on children's clothes?

No - children's clothing and footwear are zero-rated. Adult clothing is standard-rated at 20%.

What is the VAT rate on restaurant meals?

The standard rate of 20%. A temporary reduced rate for hospitality was introduced during the pandemic, but that ended and hospitality has been back at the standard rate since 2022.

How much is VAT in England specifically?

The same as the rest of the UK - 20% standard, 5% reduced, 0% zero-rated. VAT doesn't vary between the UK's nations.

Ready to put this into practice?

Use our free Invoice Generator — no signup required.

Open Invoice Generator →

Ready to put this into practice?

Use our free VAT Calculator — no signup required.

Open VAT Calculator →

Ready to put this into practice?

Use our free Profit Margin Calculator — no signup required.

Open Profit Margin Calculator →