Understanding UK VAT Rates (2026 Guide)
Value Added Tax (VAT) in the United Kingdom is a tax charged on most goods and services. As a business owner or consumer, knowing the difference between the three main rates is crucial for compliance with HMRC (His Majesty's Revenue and Customs).
1. Standard
20%Applies to most goods and services: electronics, clothing, legal services, and cars (purchase/lease).
2. Reduced
5%Children's car seats and domestic fuel and power.
3. Zero
0%Most food, books, newspapers, and children's clothes. Qualifying installations of energy-saving materials in residential accommodation are also zero-rated until 31 March 2027; materials purchased without installation do not qualify for this relief.
Rates last checked: . Source: HMRC — VAT rates.
HMRC — Energy-saving materials (VAT Notice 708/6): HMRC — Energy-saving materials (VAT Notice 708/6).
What is the VAT Reverse Charge?
The Domestic Reverse Charge is a major anti-fraud measure that affects the UK construction industry. If you are a contractor buying services from a sub-contractor under the Construction Industry Scheme (CIS), you must account for the VAT yourself instead of paying it to the supplier.
💡 Tip: Use our app to handle complex Reverse Charge calculations instantly.
Gross vs. Net: How to Calculate Manually
Often, you need to work backwards to find the price before tax. Here is the math behind our tool:
The "Divide by 1.2" Rule
To convert a Gross price (Inc. VAT) to Net (Ex. VAT) at the standard 20% rate, simply divide the total by 1.2.
The "Divide by 6" Rule
To find only the VAT amount from a total price, divide the Gross amount by 6.
