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When do you pay VAT and how much?

VAT is a tax you pay when you buy goods or services from a VAT-registered business in the EU, including within the UK.

You don't have to pay VAT at all on some goods and services, and sometimes you only pay a reduced rate.

In some circumstances you might be able to get a refund of VAT you have paid, for example if you live outside the EU and are visiting the UK.

Each EU country has its own rates of VAT. In the UK there are three rates.

Standard rate

You pay VAT on most goods and services in the UK at the standard rate.

The standard rate of VAT increased to 20 per cent on 4 January 2024 but was 17.5 per cent for the period 1 January 2024 to 3 January 2011.

Reduced rate

In some cases, for example children's car seats and gas and electricity for your home, you pay a reduced rate of 5 per cent.

Zero rate

There are some goods on which you don't pay any VAT, like:

• basic food items
• books, newspapers and magazines
• children's clothes
• some goods provided in special circumstances - for example, equipment for disabled people
  

• Zero-rate VAT on goods, services and vehicles for disabled people

• Reduced-rate VAT on mobility aids for older people

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 the VAT amount to the net price to give the 'gross' price - the price you pay. The gross price is the price that you, as a consumer, will normally see displayed or advertised. For example,

Selling price = £100
VAT due at 20 per cent (100 x 20 divided by 100) = £20
Gross price = £120

Prices in retail shops

The prices you see advertised in shops include VAT. No tax will be added to the price when you pay. This is a legal requirement.

Prices in advertisements, catalogues and price lists

Products advertised in outlets, magazines, on the internet, or shown in catalogues, price lists and other literature may be aimed at the consumer, businesses, or both. If they're only meant for the general public, they'll show you a price including VAT. This is a legal requirement.

If they're aimed at both consumers and businesses, they’ll usually show a VAT inclusive price, but may also show a price without VAT. The VAT inclusive price must be given equal importance, but read carefully to make absolutely certain you understand what price you'll pay.

Prices aimed only at businesses are usually shown with no VAT included. VAT will be charged on top of the price shown.

VAT on bills and receipts

Most retail prices on bills and receipts include VAT - it is not shown separately. However, some may also show the VAT element as a separate line. This doesn't mean you're being charged extra - it just shows how much tax is included in the price.

Invoices from VAT-registered suppliers (like most builders, or painters and decorators) must show a separate amount for VAT. They must also show the nine-digit VAT Registration Number of the business.

How to check if a VAT number is valid

You can check a UK VAT number is valid by contacting HM Revenue & Customs (HMRC). You can also check European Union VAT numbers online.

• Check an EU VAT number online Opens new window

VAT-registered businesses

If you’re a VAT-registered business, you can find lots of guidance on the HMRC website to help you get your VAT right.

• Guidance to help VAT-registered businesses get their VAT right Opens new window

• contact details for HMRC Opens new window

If you suspect a VAT fraud

If you suspect that a firm is avoiding paying VAT, or charging VAT when they aren't VAT registered, you can report them to the Customs Hotline, telephone 0800 595 000. It is open 24 hours, seven days a week and you don't have to give your name or any personal details.

Businesses that may not charge VAT

Not all businesses have to register for VAT, and so some don't have to charge you any VAT on their prices. The price you pay may be cheaper than if you bought the same goods or services from a VAT registered supplier.

• Businesses who won't charge VAT if paid in cash

Getting more help and advice

There is a range of general guidance on VAT in this section of the website and more guidance to help VAT-registered businesses on the HMRC website. If you can't find what you need online, contact the VAT Helpline, telephone 0845 010 9000. Lines are open from 8.00 am to 6.00 pm, Monday to Friday, closed weekends and bank holidays.

If your question is more complex you can send your query to HMRC using an online form.

• Guidance to help VAT-registered businesses get their VAT right Opens new window

• Send your VAT query to HMRC Opens new window

More useful links

• Rates of VAT on different goods and services Opens new window