1. Overview

VAT is a tax you pay on most goods and services. You pay 20% VAT most of the time - but less on essential items.

Rate % of VAT What the rate applies to
Standard 20% Most goods and services
Reduced rate 5% Some goods and services, eg children’s car seats and some energy-saving materials in the home
Zero rate 0% Zero-rated goods and services, eg most food and children’s clothes

Some things are exempt from VAT - eg postage stamps, some financial and property transactions.

How VAT is worked out

When someone charges you VAT they multiply their selling price by the VAT rate to calculate the amount of VAT to charge.

They then add this to the selling price to give you the price you actually pay - this is called the ‘gross’ price.

VAT fraud

If a business doesn’t have a VAT number they’re not registered for VAT and must not charge VAT.

You can check a UK VAT number is valid and report VAT fraud online.

VAT and disabled people

You don’t have to pay VAT on certain goods and services if they’re just for your own use and you’re disabled or have a long-term illness.

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