Reference
Reference: UK VAT Rates and Categories 2025/26
A quick-reference of the UK's VAT categories — standard, reduced, zero-rated and exempt — with examples of typical goods and services in each band.
Quick answers
What is the difference between zero-rated and exempt VAT?
Zero-rated supplies are VAT-able at 0% — the supplier can register and reclaim input VAT on related costs. Exempt supplies are outside VAT entirely — no VAT is charged but the supplier cannot reclaim input VAT on related costs. Most insurance, finance, education and health are exempt; most food, children's clothes and books are zero-rated.
What is the UK VAT standard rate in 2025/26?
20% — unchanged since 4 January 2011. The reduced rate is 5% (applies to domestic fuel, children's car seats, etc.). Zero rate is 0% (most food, children's clothes, books). Exempt categories include insurance, finance, education and health services.
The four VAT categories
| Category | Rate | Effect on input VAT recovery |
|---|---|---|
| Standard | 20% | Recovery subject to normal rules |
| Reduced | 5% | Recovery subject to normal rules |
| Zero-rated | 0% | Recovery subject to normal rules |
| Exempt | — | No recovery on related costs |
The crucial difference between zero-rated and exempt is input VAT recovery. A wholly exempt business cannot recover any VAT on its costs and usually cannot register for VAT.
Standard rate (20%)
The default rate for most UK supplies of goods and services unless specifically reduced, zero-rated or exempt. Common examples:
- Most consumer goods (clothing, electronics, furniture)
- Restaurant meals and hot takeaway
- Adult clothing and footwear
- Soft drinks, including bottled water
- Confectionery and crisps
- Hairdressing
- Hospitality (hotel rooms, eating in)
Reduced rate (5%)
| Item | Notes |
|---|---|
| Domestic fuel and power | Gas, electricity, heating oil for homes |
| Energy-saving materials installed in homes | Insulation, solar panels, heat pumps — currently 0% to 31 March 2027, then back to 5% |
| Children's car seats | All ages |
| Mobility aids for the elderly | Specific items only |
| Smoking cessation products | Nicotine patches, gum |
| Sanitary products | Now 0% (zero-rated) since 2021 |
Zero-rated (0%)
VAT is technically charged but at 0%. Suppliers can register and recover input VAT.
- Most food for human consumption (cold takeaway, supermarket groceries)
- Children's clothing and footwear
- Books, newspapers, magazines (printed and most digital since May 2020)
- Passenger transport in qualifying vehicles designed or adapted for at least 10 passengers, subject to the transport rules
- Prescription medicines
- Construction of new dwellings (with conditions)
- Exports of goods meeting the relevant export and evidence conditions
- Disability aids supplied to disabled people
- Sanitary products
Watch the food rules
Food is zero-rated unless it falls into a standard-rated exception. Standard-rated food includes hot takeaway, restaurant meals, ice cream, confectionery, chocolate-covered biscuits, crisps and most savoury snacks. Cake is zero-rated; biscuits coated in chocolate are standard-rated — leading to famous cases such as Jaffa Cakes (zero-rated, "cake").
Exempt
No VAT charged and no input VAT recovery on related costs. Includes:
- Most insurance
- Most financial services (banking, lending, dealing in money)
- Education and vocational training by eligible bodies
- Health services by registered professionals
- Postal services by Royal Mail (universal service)
- Burials and cremations
- Subscriptions to certain trade unions and professional bodies
- Sports activities and physical education
Outside the scope
Not VAT-able at all (different from exempt):
- Wages and salaries (employment)
- MOT test fees (statutory)
- Tolls (some)
- Goods/services supplied outside the UK (place of supply rules)
- Donations with no supply in return
Mixed and composite supplies
When a single supply combines elements with different VAT treatment, HMRC distinguishes:
- Composite supply: a single supply with one dominant element — VAT-treated as that element (e.g. an in-flight meal as part of an air ticket = zero)
- Multiple supply: separable economically and contractually — each element treated separately (e.g. a hotel room + meal — the meal is a separate standard-rated supply)
When the rate changed
| Date | Standard rate |
|---|---|
| 4 January 2011 – present | 20% |
| 4 January 2011 onwards | 20% |
| 1 January 2010 – 3 January 2011 | 17.5% |
Filing implications
- Standard, reduced and zero-rated supplies all go in box 6 of the VAT return (net sales)
- Exempt supplies usually still appear in box 6 but trigger partial exemption rules
- VAT charged appears in box 1; VAT reclaimed in box 4
General guidance, not tax advice. Speak to a qualified accountant for advice tailored to your situation. Figures relate to the 2025/26 UK tax year. Source: HMRC, gov.uk.
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