UK VAT Rates 2026: A Complete Guide
17 August 2026
Discover UK VAT rates for 2026: standard 20%, reduced 5%, zero-rated goods, plus thresholds and when to register. Updated guide for businesses.
Overview of UK VAT Rates in 2026
Value Added Tax (VAT) is a consumption tax levied on most goods and services in the United Kingdom. As of 2026, the main VAT rates remain unchanged: a standard rate of 20%, a reduced rate of 5%, and a zero rate of 0%. These rates apply to supplies made in England, Wales, Scotland, and Northern Ireland, though some cross-border rules differ. Understanding which rate applies to your products or services is essential for accurate pricing, invoicing, and compliance. This guide breaks down each rate, lists common examples, and explains how to determine the correct treatment for your business activities.
Standard Rate (20%): Most Goods and Services
The standard VAT rate of 20% applies to the vast majority of goods and services in the UK. This includes everyday items such as electronics, clothing (not child-sized), adult footwear, furniture, motor vehicles, and most professional services like accountancy, legal advice, and hairdressing. It also covers digital products, downloaded software, and most hospitality services, although some have temporary or reduced rates. If you are VAT-registered and sell standard-rated supplies, you must add 20% to your prices unless an exemption or zero-rating applies. Always check HMRC’s guidance for specific categories, as some seemingly standard items may have special rules.
Reduced Rate (5%): Energy, Mobility, and More
A reduced VAT rate of 5% applies to a limited range of goods and services, mainly for social or environmental reasons. Common items include domestic fuel and power (gas, electricity, heating oil), children’s car seats, mobility aids for the elderly, and sanitary products. It also covers certain energy-saving materials installed in homes, such as insulation or solar panels, subject to conditions. Renovations and alterations to dwellings can qualify for the reduced rate, as can some holiday accommodation and hot takeaway food (though the latter was temporarily 5% during the pandemic, it has reverted). Check HMRC’s specific list to see if your product qualifies.
Zero-Rated Supplies: Still VATable but at 0%
Zero-rated supplies are taxable for VAT purposes, but the rate is 0%, meaning you can still reclaim VAT on your business purchases if registered. Common zero-rated items include most food (excluding restaurant meals and hot takeaways), books, newspapers, children’s clothing and footwear, public transport, and new residential buildings. Exports to non-VAT territories are also zero-rated. Unlike exempt supplies, zero-rated sales count towards your VAT registration turnover threshold. It’s important to distinguish zero-rated from exempt: exempt supplies (financial services, education, health) don’t attract VAT and also restrict input VAT recovery. Maintain accurate records to justify your zero-rating decisions.
VAT Registration Threshold and Rules in 2026
For 2026, the VAT registration threshold is £90,000 (unchanged from previous years). If your taxable turnover, including zero-rated sales, exceeds this over a rolling 12-month period, you must register for VAT. You can also voluntarily register if your turnover is lower, which may be beneficial if you reclaim VAT on purchases. Once registered, you must charge VAT at the correct rates and file returns either quarterly or under the Annual Accounting Scheme. There are special schemes for cash accounting, flat-rate, and retail, which can simplify processes. Failure to register on time can result in penalties, so monitor your turnover carefully and seek professional advice if uncertain.
FAQ
The standard VAT rate in the UK remains 20% for 2026. This applies to most goods and services, including electronics, clothing, professional services, and digital products unless specifically zero-rated, reduced-rated, or exempt.