VAT rates: which one applies to your product?

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There are currently three VAT rates in practice, along with exemptions and items outside the scope of the tax to which no VAT applies. They are as follows:

Standard rating – 20%

  • As this is the standard rate, this applies to everything unless specified otherwise.

Reduced rating – 5%

  • Domestic fuel
  • Smoking cessation products
  • Supplies of energy saving materials
  • Contraceptive products
  • Certain construction services

Zero rating – 0%

  • Food
  • Books
  • Children’s clothing
  • Passenger transport
  • Exports
  • Sales of goods to the EU
  • New homes
  • Some construction services (domestic and charitable buildings)
  • International services
  • Sewerage and water
  • Protective clothing

Exemptions – no VAT rates apply

  • Land and property
  • Education
  • Burial and cremation
  • Cultural services
  • Charity fundraising
  • Finance and insurance
  • Health and welfare
  • Postal services
  • Betting and gaming
  • Subscriptions to trade unions and professional bodies
  • Cost-sharing groups

Outside the scope of the tax – no VAT rates apply

  • Grants
  • Donations
  • Compensation
  • Insurance claims
  • Statutory charges (such as marriage licences and driving licenses)
  • Legacies

(This information is correct as of October 2016; as VAT is an EU tax, there are likely to be significant changes over the coming years. See our VAT Brexit Briefing Note for more information.)

If you have a question about a specific product or service, get in touch and we can advise which rate applies.

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