Understanding UK VAT Rates in Detail

A comprehensive guide to understanding when and how different VAT rates apply to goods and services.

Standard Rate (20%)

When It Applies

• Most goods and services
• Luxury items
• Professional services
• Standard retail goods

Common Examples

• Electronics
• Professional fees
• Adult clothing
• Home improvements

Reduced Rate (5%)

Qualifying Items

• Domestic fuel and power
• Energy saving materials
• Mobility aids
• Children's car seats

Zero Rate vs VAT Exempt

Zero Rate

• Business can reclaim VAT
• Must be registered
• Full record keeping required

VAT Exempt

• No VAT charged
• Cannot reclaim VAT
• Different reporting requirements