UK VAT Rates 2026: Standard, Reduced & Zero Rate Explained
📣 2026 update: VAT on domestic electricity is being cut from 5% to 0% from 1 October 2026 to 31 March 2027 in Great Britain — a temporary change we explain in the reduced-rate section below.
- The UK has three VAT rates: standard 20%, reduced 5% and zero 0%.
- Standard 20% covers most goods and services; reduced 5% covers things like home energy and children's car seats; zero 0% covers most food, books and children's clothes.
- Zero-rated is not the same as exempt. Zero-rated sales are still taxable (at 0%) and let you reclaim VAT; exempt sales don't.
- Domestic electricity moves to 0% from 1 October 2026 for six months — gas stays at 5%.
- You must charge VAT once your taxable turnover passes the £90,000 registration threshold.
- Need your VAT returns handled? Our VAT return service takes care of it.
VAT looks simple — 20% on everything, right? Not quite. The UK runs three different VAT rates, plus separate categories for goods that carry no VAT at all, and getting the distinction wrong is a common bookkeeping error. Here's a clear breakdown of every UK VAT rate for 2026, what falls into each, and the difference that trips people up most: zero-rated versus exempt.
What are the current UK VAT rates?
There are three rates of VAT in the UK, and the rate you charge depends on the goods or services you're selling:
| Rate | % | Applies to (examples) |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Home energy, children's car seats, mobility aids |
| Zero | 0% | Most food, books, newspapers, children's clothes |
The standard rate of 20% is the default — if something isn't specifically reduced-rated, zero-rated or exempt, you charge 20% on it.
What is the standard rate of VAT?
The standard rate is 20%, and it applies to the vast majority of goods and services: electronics, furniture, professional services, hospitality, most clothing for adults, and so on. It has been 20% since 4 January 2011, when it rose from 17.5%.
What is the reduced rate of VAT?
The reduced rate is 5%. It applies to a specific list of goods and services, the best known being domestic fuel and power (household gas and electricity), along with children's car seats, mobility aids for older people, and certain energy-saving materials.
2026 change to watch: the government has cut VAT on domestic electricity from 5% to 0% for six months, from 1 October 2026 to 31 March 2027, across Great Britain. It's a temporary measure aimed at household bills — note it applies to electricity only, not gas, which stays at 5%, and Northern Ireland is treated separately.
What is the zero rate of VAT?
Zero-rated goods are taxable, but at a rate of 0%. In practice you charge no VAT to the customer, but — and this is the important part — these are still VATable sales. Common zero-rated items include most food, books and newspapers, children's clothing and footwear, and public transport.
"Most food" carries some famous exceptions: hot takeaway food, restaurant meals, alcohol, confectionery and crisps are all standard-rated at 20% — which is why the VAT status of a single item, a cake versus a biscuit, can hinge on surprisingly fine distinctions.
Zero-rated, exempt or outside the scope: what's the difference?
This is the distinction that catches businesses out, because all three can look like "no VAT charged" — but they behave very differently on your VAT return:
| Category | VAT charged | Can you reclaim input VAT? | Examples |
|---|---|---|---|
| Zero-rated | 0% (still taxable) | Yes | Food, children's clothes, books |
| Exempt | None | No | Insurance, finance, postage stamps, some property |
| Outside the scope | None | No | Wages, taxes paid to HMRC |
The key line is between zero-rated and exempt. Zero-rated sales still count as taxable supplies, so they go towards your VAT registration threshold and you can reclaim the VAT on your costs. Exempt sales are outside VAT altogether — you charge nothing, but you generally can't reclaim the VAT you paid to make them. Getting an item into the wrong category is costly: you either under-charge VAT and owe HMRC the difference, or over-reclaim and face an assessment. If your range spans more than one rate, it's worth having it checked.
When do you have to charge VAT?
You only charge VAT once you're VAT-registered, and registration becomes compulsory when your taxable turnover passes £90,000 in any rolling 12-month period, or you expect to cross it within the next 30 days. Below that, you can register voluntarily.
Once registered, you charge the correct rate on your sales, reclaim VAT on eligible purchases, and file quarterly VAT returns under Making Tax Digital. You can estimate the VAT on a price with our free UK tax calculators, and if you'd rather not deal with the returns at all, our VAT return filing service handles registration, calculations and submission for you.
Frequently asked questions
What is the current rate of VAT in the UK?
The standard rate of VAT is 20% and applies to most goods and services. There is also a reduced rate of 5% (for things like home energy) and a zero rate of 0% (for most food, books and children's clothes).
What is the difference between zero-rated and exempt?
Zero-rated goods are taxable at 0%, so no VAT is charged but the sale still counts as a taxable supply and you can reclaim VAT on related costs. Exempt goods have no VAT and you generally cannot reclaim the VAT you paid to produce them.
Is VAT on electricity really being cut to 0%?
Yes. VAT on domestic electricity in Great Britain is being reduced from 5% to 0% for six months, from 1 October 2026 to 31 March 2027. It applies to electricity only — gas stays at the 5% reduced rate — and Northern Ireland is treated separately.
Is there VAT on food in the UK?
Most food is zero-rated, so no VAT is charged. But there are exceptions taxed at the standard 20% rate, including hot takeaway food, restaurant meals, alcohol, confectionery and crisps.
When do I have to register for VAT?
You must register when your taxable turnover passes the £90,000 threshold in any rolling 12-month period, or if you expect to cross it within the next 30 days. You can also register voluntarily below that level.
We'll get you registered, apply the right rate to every product, reclaim what you're owed, and file your quarterly returns under Making Tax Digital — for a fixed monthly fee. Get a quote or message us today.
Related: our VAT return filing service and free UK tax calculators. Official guidance is on the gov.uk VAT rates pages.