2. VAT rates

There are 3 different rates of VAT and you must make sure you charge the right amount.

Standard rate

Most goods and services are standard rate. You should charge this rate unless the goods or services are classed as reduced or zero-rated.

Reduced rate

When to charge this rate can depend on the item being provided but also the circumstance of the sale. For example:

  • children’s car seats and domestic fuel or power are always charged at 5%
  • mobility aids for older people are only charged at 5% if they’re for someone over 60 and the goods are installed in their home

Zero rate

Zero-rated means that the goods are still VAT-taxable, but the rate of VAT you must charge your customers is 0%. Examples of zero-rated goods include:

  • books and newspapers
  • children’s clothes and shoes
  • motorcycle helmets

You still have to record zero-rated transactions in your VAT accounts and report them on your VAT Return.

Rates can change and you must apply any changes to the rates from the date they change.

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