Current VAT Rate UK

UK VAT rates at a glance

The UK has three VAT rates, plus a category of goods and services that are exempt from VAT altogether. The table below shows what each rate covers.

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What the VAT rates cover

The current standard VAT rate in the UK is 20%, which applies to most goods and services. However, there are exceptions. A reduced rate of 5% is charged on certain items, such as domestic gas and electricity, children’s car seats, and some energy saving materials. Some items are zero rated (0%), meaning VAT is technically applied but at a rate of 0%. This covers most food, books, newspapers, children’s clothes, and public transport. In addition, some goods and services are completely exempt from VAT, such as financial services, insurance, health, postal services, and education.

VAT is an indirect tax collected by the government through businesses on the sale of taxable goods and services. Businesses add VAT to their prices and then pass it on to HMRC.

Registration threshold (2026)

You must register for VAT once your taxable turnover passes the registration threshold, which is £90,000 for 2026. That figure has applied since April 2024 and was left unchanged in the 2025 Budget, so it holds for the whole of 2026. Taxable turnover means the total of everything you sell that is not exempt or outside the scope of VAT, measured over any rolling twelve months rather than your accounting year.

There are two triggers to watch. Under the backward look, if your taxable turnover passed £90,000 at the end of any month, you must register within 30 days of the end of that month, and registration then takes effect from the first day of the second month after you went over. Under the forward look, if you expect your taxable turnover to pass £90,000 in the next 30 days on its own, you must register by the end of that 30 day period.

Registration is based on turnover, not on your legal structure, so the same £90,000 threshold applies to sole traders, partnerships and limited companies alike. Our guide on how to register for VAT explains the process, and you can also register voluntarily below the threshold if it suits your business.

How do you pay VAT?

Any business with a turnover of over £90,000 in the last 12 months is required to pay VAT to HM Revenue and Customs, the department of the UK government responsible for the collection of tax.

Businesses can pay VAT in different ways. The speed of each method depends on how the payment is sent.

Same day or next day payments

These reach HMRC’s account quickly:

• Online or telephone banking (Faster Payments)
• Clearing House Automated Payment System (CHAPS)

Payments that usually take up to 3 working days

• Direct Debit, though the first time you set one up it can take longer, so arrange it early.
• BACS (Bankers Automated Clearing Services)
• Standing order, only if you use the Annual Accounting Scheme
• Online card payment, with a debit card or a corporate credit card (personal credit cards are not accepted)
• At a bank or building society, only if HMRC has sent you a paying in slip

Important to remember

• Your payment must clear HMRC’s account by the VAT deadline, not just be sent on that day.
• Payments made on weekends or bank holidays normally clear on the next working day.
• Always check you are using the correct VAT reference number to avoid delays.

History of VAT in the UK

VAT was introduced in the UK on 1 April 1973, when the country joined the European Economic Community (now the EU). It replaced the Purchase Tax, which had been in place since 1940 during the Second World War. The first VAT standard rate in 1973 was 10%.

Since then, the rate has changed several times: it was cut to 8% in 1974, increased again in later years, and set at 17.5% in 1991. During the 2008 financial crisis, it was temporarily reduced to 15% to encourage spending. Finally, in 2011, the standard rate was raised to 20%, where it has remained ever since.

While the UK was part of the European Union, EU rules required a minimum VAT standard rate of 15% across member states. After Brexit, the UK is no longer bound by this rule, but the government has chosen to keep the standard rate at 20%.

When paying VAT

Getting VAT right on your invoices is important for two reasons: it ensures your customers are charged correctly, and it allows you to submit accurate VAT Returns to HMRC.

What a VAT invoice must include

A full VAT invoice should clearly show:

• A unique invoice number
• The date of the invoice and the time of supply (also called the tax point, if different)
• Your business name, address, and VAT registration number
• Your customer’s name and address
• A clear description of the goods or services supplied

For each item or service on the invoice, you must also show:

• The unit price excluding VAT
• The quantity or extent of goods or services
• The rate of VAT charged (for example, 20%, 5%, or 0%)
• The total amount before VAT
• The VAT amount charged
• The total amount including VAT
• Any cash discount offered

Types of VAT invoices

• Full VAT invoice, the standard format, used in most cases.
• Simplified invoice, which can be used if the total is under £250 including VAT. This requires fewer details.
• Modified invoice, which can be used by retailers for sales over £250, showing VAT inclusive pricing.

Why this matters

Accurate invoices help avoid mistakes on your VAT Return and reduce the risk of HMRC penalties. They also provide your customers with the correct evidence to reclaim VAT if they are VAT registered.

2026 VAT rates for countries around the world

VAT, or an equivalent goods and services tax, is used in most countries. The tables below show standard rates as recorded in March 2026. Rates can change, so treat these as a general guide rather than a live figure for any single country.

European Union (EU-27) standard VAT rates

Non EU standard VAT rates

Countries without a standard VAT (as of March 2026)

Frequently asked questions

Sources: HMRC and gov.uk guidance on VAT rates, VAT thresholds, and paying your VAT bill; gov.uk news on the temporary cut to VAT on domestic electricity from 1 October 2026; HMRC Revenue and Customs Brief 5 (2026) on the temporary reduced rate for children’s meals, tickets and family attractions. Standard rates for other countries are as recorded in March 2026. Figures are general guidance for 2026 and not advice on your own circumstances.