What is the standard UK VAT rate?

The standard UK VAT rate is 20%, applied to most goods and services. It has been at 20% since 4 January 2011 and remains unchanged for the 2026/27 tax year.

What is the reduced VAT rate (5%) for?

The 5% reduced rate covers domestic fuel and power (electricity and gas for home use), mobility aids for people aged 60+, children's car seats, certain energy-saving materials installed in homes, and a few other categories. Most household consumer goods are at the 20% standard rate.

What is zero-rated VAT?

Zero-rated supplies have a VAT rate of 0%, meaning no VAT is charged but the supply is still VAT-able (so input VAT can be reclaimed by the seller). Zero-rated categories include most food, books and newspapers, children's clothing and footwear, public passenger transport, and new-build residential property. Zero-rated is not the same as VAT-exempt.

How do I work out VAT from a gross price?

To extract VAT from a gross price at the 20% standard rate, divide the gross by 1.20 to get the net, then subtract the net from the gross to get the VAT. Or use the "VAT fraction" of 1/6: VAT = gross x (1/6). At the 5% reduced rate, divide gross by 1.05 (VAT fraction 1/21).

What is the UK VAT registration threshold?

A business must register for VAT with HMRC when its taxable turnover over a rolling 12-month period exceeds £90,000 (in force from 1 April 2024 onwards). Voluntary registration is available below the threshold and can be tax-advantageous when most customers are themselves VAT-registered (input VAT recoverable).

Do I charge VAT to customers outside the UK?

Generally no for goods exported outside the UK (zero-rated) and varies for services depending on the place-of-supply rules. EU customers are treated as exports since Brexit. Detailed VAT rules on cross-border supplies depend on the specific transaction type - consult HMRC guidance or a VAT specialist.

VAT on £2,500 UK 2026/27

UK VAT on a £2,500 amount depends on whether the figure is net (excluding VAT) or gross (including VAT), and which rate applies. Below shows both directions across the three UK VAT rates - 20% standard, 5% reduced (domestic fuel, mobility aids, children's car seats), and 0% zero-rated (food, books, public transport, children's clothing).

If £2,500 is the NET amount

Rate	Net	VAT	Gross
Standard 20%	£2,500	£500	£3,000
Reduced 5%	£2,500	£125	£2,625
Zero 0%	£2,500	£0	£2,500

If £2,500 is the GROSS amount (VAT extraction)

Rate	Net	VAT	Gross
Standard 20%	£2,083	£417	£2,500
Reduced 5%	£2,381	£119	£2,500

VAT fraction trick: at the 20% standard rate, VAT = gross × (1/6). At 5% reduced: VAT = gross × (1/21).

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Frequently asked questions

What is the standard UK VAT rate?: The standard UK VAT rate is 20%, applied to most goods and services. It has been at 20% since 4 January 2011 and remains unchanged for the 2026/27 tax year.
What is the reduced VAT rate (5%) for?: The 5% reduced rate covers domestic fuel and power (electricity and gas for home use), mobility aids for people aged 60+, children's car seats, certain energy-saving materials installed in homes, and a few other categories. Most household consumer goods are at the 20% standard rate.
What is zero-rated VAT?: Zero-rated supplies have a VAT rate of 0%, meaning no VAT is charged but the supply is still VAT-able (so input VAT can be reclaimed by the seller). Zero-rated categories include most food, books and newspapers, children's clothing and footwear, public passenger transport, and new-build residential property. Zero-rated is not the same as VAT-exempt.
How do I work out VAT from a gross price?: To extract VAT from a gross price at the 20% standard rate, divide the gross by 1.20 to get the net, then subtract the net from the gross to get the VAT. Or use the "VAT fraction" of 1/6: VAT = gross x (1/6). At the 5% reduced rate, divide gross by 1.05 (VAT fraction 1/21).
What is the UK VAT registration threshold?: A business must register for VAT with HMRC when its taxable turnover over a rolling 12-month period exceeds £90,000 (in force from 1 April 2024 onwards). Voluntary registration is available below the threshold and can be tax-advantageous when most customers are themselves VAT-registered (input VAT recoverable).
Do I charge VAT to customers outside the UK?: Generally no for goods exported outside the UK (zero-rated) and varies for services depending on the place-of-supply rules. EU customers are treated as exports since Brexit. Detailed VAT rules on cross-border supplies depend on the specific transaction type - consult HMRC guidance or a VAT specialist.