VAT rates and exemptions Great Britain

VAT Rates in the United Kingdom

The standard rate is 20%, and it applies to most common products, services, and goods.

The reduced rate is 5%, which covers certain products and services, including child car seats and bicycle helmets.

Zero-rate 0% applies to the most common food items and children's clothing.

Exempt from VAT - typically covers financial services and similar transactions.

VAT Exemptions and Reduced Rates in the United Kingdom

• Food and beverages.
• Plants and plant seeds.
• Sports leisure, culture, and antiques.
• Health, education, welfare, and charity.
• Heating, water, sanitation, power, and energy production.
• Buildings and construction, including building plots and property.
• Transport, freight, travel, and vehicles.
• Printing, postage, and publications of books, magazines, and newspapers.
• Clothing and footwear, protective and safety equipment.
• Financial services, investments, and insurance.
  
  

Food and beverages.

Food and beverages for consumption are usually zero-rated, but there are specific rules where full VAT applies, including:

• Catering services.
• Alcoholic drinks.
• Pastries and confectionery.
• Chips and similar snacks.
• Hot takeaway food.
• Sports drinks.
• Hot prepared food.
• Ice cream, soft drinks, and mineral water

In summary, takeaway food is VAT exempt as long as it is served cold.

Plants and plant seeds

Plants and plant seeds used for food production are usually exempt from VAT, including:

• Plant seeds, spores, etc., used for cultivating plants.
• Plant seeds for consumption and use in cooking.

However, if your plant seeds are sold as bird feed or generally as animal feed for private use, or if they are sold for purposes other than human consumption, full VAT applies.

Plants that are not suitable for food are also subject to full VAT, except fruit trees and fruit bushes, which are VAT exempt.

A general rule of thumb is that anything in the kingdom of plants that either produces or can be used to grow something that provides food for consumption is usually VAT exempt.

Sport, leisure, culture, and antiques

Sales to sports events, physical recreation, and education within the sports world are exempt from VAT when certain criteria are met, such as:

• Sports events/clubs must be non-profit and have provisions in place on how any surplus may be used and distributed.
• Sports events/clubs must not engage with individuals or companies that are in any way related to the event/club or related to a member of the event/club.
• Sports events/clubs must be activities falling under Sport and Sports Education, as outlined in section 3.2 of "Sport supplies that are VAT exempt" on the UK authorities' website.

Under leisure, we find gambling, sports betting, and lotteries, where the rule is that all prize-winning games classified as chance games are exempt from VAT.
If tournaments are held where participants must pay an entry fee, and the amount is included as part of the prize money, the participation fees are also VAT exempt.
If such prize-winning tournaments require payment to access the facilities where the tournament takes place, the entrance fees are also VAT exempt.

Health, education, welfare, and charity

The majority of items related to charity are either exempt from VAT or subject to reduced VAT rates, including:

• Admission fees to charity events – exempt from VAT
• Marketing services for charities – reduced rate 0%
• Certain items sold at events raising funds for charitable purposes – reduced rate 0%
• Charity shops or similar establishments passing on all profits to charitable organizations – reduced rate 0%
• Construction and sale of new buildings intended to house charitable organizations – reduced rate 0%
• Energy-saving materials permanently installed in residential and relevant-purpose buildings, provided that the total cost (excluding VAT) does not exceed 60% of the installation costs (excluding VAT) – reduced rate 5%
• Sponsored charity events – exempt from VAT
• Voluntary donations to charity – fall outside the scope of VAT legislation
  
  

Under welfare, the following apply:

• Building fixtures and services – reduced rate 0%
• Funeral, cremation, or burial at sea – exempt from VAT
• Mobility aids for the elderly – reduced rate 5%
• Aids for the blind and visually impaired – reduced rate 0%
• Aids for the disabled – reduced rate 0%
• Pre-paid funeral plans arranged in the form of insurance contracts – exempt from VAT
• Smoking cessation products, including nicotine patches and gum – reduced rate 5%
• Welfare services provided by charitable organizations at a significantly low cost – fall outside the scope of VAT legislation
• Recording and playback equipment designed for the exclusive use of recording and playing back speech for blind and visually impaired individuals – reduced rate 0%
  
  

VAT exemptions and other rates for the health category:

• Care and medical treatment provided by an authorized institution such as a hospital, hospice, or care home – exempt from VAT
• Dispensing of prescriptions by a registered pharmacist – reduced rate 0%
• Medical examinations and treatments provided by registered doctors, dentists, opticians, pharmacists, or other professionals offering health examinations and treatments – exempt from VAT
• Hygiene products – reduced rate 0%
• Adult diapers or similar products – reduced rate 0%
• Aids for the visually impaired – reduced rate 0%
  
  

Education:

All education, vocational training, and related services provided by a certified institution, such as a school, college, or university, are generally exempt from VAT.

Heating, water, sanitation, and power supply and production:

Power supply and production:

• Electricity for household, private, or non-commercial use for a charitable organization – reduced rate 5%
• Gas for household, private, or non-commercial use for a charitable organization – reduced rate 5%
• Heating oil for household, private, or non-commercial use for a charitable organization – reduced rate 5%
• Solid fuel such as wood, coke, coal, etc., for household, private, or non-commercial use for a charitable organization – reduced rate 5%

Sanitation:

• Emptying of septic tanks for private use – reduced rate 0%
• Sewer work, including maintenance – reduced rate 0%
• Domestic water supply – reduced rate 0%

Energy-saving materials installed in residential and other approved residential buildings for private use.

"To qualify for the reduced rate, you must be at least 60 years old or have received some of the benefits described in VAT Notice 708/6. Alternatively, you may be eligible for the reduced rate on materials if the total cost of the materials (excluding VAT) does not exceed 60% of the total amount, including installation costs (excluding VAT). If the materials exceed 60% of the total installation price, you will only be eligible for the reduced VAT rate on the installation cost itself."

• Air-to-water/air heat pumps – reduced rate 0% (5% in Northern Ireland)
• Wood-burning stoves and boilers – reduced rate 0% (5% in Northern Ireland)
• Central heating and water control systems – reduced rate 0% (5% in Northern Ireland)
• Sealing strips – reduced rate 0% (5% in Northern Ireland)
• Ground source heat pumps – reduced rate 0% (5% in Northern Ireland)
• Insulation and retrofit insulation – reduced rate 0% (5% in Northern Ireland)
• Micro-combined heat and power units – reduced rate 0% (5% in Northern Ireland)
• Solar panels – reduced rate 0% (5% in Northern Ireland)
• Water and wind turbines – reduced rate 0% (5% in Northern Ireland)

Heating equipment and connection to gas pipelines (eligible for subsidies for individuals over 60 or recipients of certain types of benefits)

Installed:

• Closed solid fuel burners – reduced rate 5%
• Combination hot water storage tank with factory-installed insulated hot water tank – reduced rate 5%
• Electric storage heaters – reduced rate 5%
• Gas-fired boilers – reduced rate 5%
• Gas-fired thermostatically controlled room heaters – reduced rate 5%
• Oil-fired boilers – reduced rate 5%
• Radiators – reduced rate 5%
• Installation, repair, and maintenance of boilers, radiators, piping, and controls, as part of the central heating system (including micro and combined heat and power systems) – reduced rate 5%
• Installation, repair, and maintenance of renewable energy heating systems. This includes heating systems powered by solar, wind, and water energy sources, or nearby renewable sources, including ground and air heat – reduced rate 5%
• Connection or reconnection to gas pipelines – reduced rate 5%

Buildings and Construction, as well as Building Sites and Property.

Buildings and Construction:

• Major renovations of protected buildings used as a residence or for a relevant charitable purpose – reduced rate 0%
• Installation of bathrooms or toilets, construction of ramps, widening of doorways and/or corridors for disabled individuals in their own homes – reduced rate 0%
• Construction and sale or long-term lease of newly constructed buildings for charitable purposes – reduced rate 0%
• Construction and sale or long-term lease of newly constructed residential buildings – reduced rate 0%
• Construction and sale or long-term lease of newly constructed commercial buildings – reduced rate 0%
• Conversion of existing building(s) by increasing the number of dwellings – reduced rate 5%
• Renovation of a residence that has been unoccupied for a minimum of 2 years – reduced rate 5%
• First sale or long-term lease of a commercial property converted to residential property – reduced rate 5%
• First sale or long-term lease of buildings converted for relevant residential use – reduced rate 0%
• First sale or long-term lease of buildings converted for relevant charitable use – reduced rate 0%

Building Plots and Real Estate:

• Garages and parking spaces leased together with residential property (under short-term rental law) – VAT exempt
• Parking permits where the actual parking takes place – VAT exempt
• Property, land, or building permits that occupy land or buildings – VAT exempt
• Sale or long-term lease of newly constructed dwellings with associated garage or parking space – reduced rate 0%

Transportation, Freight, Travel, and Vehicles

Transportation:

• Repair and maintenance of airborne vessels, including airplanes, helicopters, etc. – reduced rate 0%

Freight:

• Transportation of freight to or from a place outside the United Kingdom – reduced rate 0%
• Freight containers – sale, lease, or rental to a third country outside the EU and the UK – reduced rate 0%
• International freight transport taking place in the UK and its territorial waters – reduced rate 0%

Travel:

• Mooring of houseboats – VAT exempt
• Garages or parking spaces associated with moored houseboats – VAT exempt
• Passenger transport in a vehicle, boat, or plane carrying more than 10 passengers – reduced rate 0%
• Tolls for the use/passage of bridges, tunnels, and roads owned by authorities – outside the scope of VAT legislation

Vehicles:

• Repair and maintenance of airborne vessels, including airplanes, helicopters, etc. – reduced rate 0%
• Sale or charter rental of airships – reduced rate 0%
• Caravans (over 7 meters long or wider than 2.55 meters) – reduced rate 0% or 5%
• Private aircraft – sale or charter rental – outside the scope of VAT legislation
• Private helicopters – sale or charter rental – reduced rate 0%
• Military aircraft – sale or charter rental – reduced rate 0%
• Repair and maintenance of ships – reduced rate 0%
• Shipbuilding of ships with a gross tonnage of 15 tons or more – reduced rate 0%

Printing, Postage, and Publications of Books, Magazines, and Newspapers

Printing of:

• Brochures - reduced rate 0%
• Leaflets - reduced rate 0%
• Booklets - reduced rate 0%

Postage:

• Postal services that meet all the conditions in VAT Notice 700/24 sections 3.2 and 3.3 - outside the scope of VAT
• Postage, packaging, and delivery within the UK, when included in the price but charged separately, e.g., for mail order - VAT rate follows the rate of the goods (Same services if not included in the price but charged as an option have the standard rate of 20%)
• Public postal services provided by Royal Mail under the universal service obligation - outside the scope of VAT
• Other postal services not covered by the universal service obligation - standard rate 20%

Publications of:

• Books - reduced rate 0%
• Children's coloring and picture books - reduced rate 0%
• Maps and guides - reduced rate 0%
• Magazines - reduced rate 0%
• Newspapers - reduced rate 0%
• Covers for music releases, e.g., CDs - reduced rate 0%
• Publications - reduced rate 0% (Some publications have a standard rate of 20%, such as training books, stationery, and posters)

Clothing and Footwear, Protective and Safety Equipment

Clothing and Footwear:

• Baby clothing - reduced rate 0%
• Children's clothing and shoes - reduced rate 0%

Protective and Safety Equipment:

• Child car seats with fastening straps for use in vehicles - reduced rate 5%
• Child car seats that can be used as strollers - reduced rate 5%
• Bicycle helmets that are CE marked - reduced rate 0%
• Motorcycle helmets that meet safety standards - reduced rate 0%
• Safety shoes and helmets - reduced rate 0%

Financial Services, Investments, and Insurance

Financial services and investments:

• Financial services involving the issuance, transfer, receipt, or general handling of money, securities, and currency exchange (including banks) - exempt from VAT
• Issuance of credit, including loans - exempt from VAT
• Credit institutions providing loans for purchase or leasing - exempt from VAT
• Credit management by the person who issued the credit - exempt from VAT
• Trading, issuance, and transfer of stocks and bonds - exempt from VAT
• Management of a special qualified investment fund - exempt from VAT
  Financial services provided in conjunction with goods and services but registered as a separate service - exempt from VAT
• Investment in gold bullion - exempt from VAT

Insurance:

• Insurance for specially selected individuals that meet the requirements of a Friendly Society - exempt from VAT
• Insurance and reinsurance transactions - exempt from VAT
• Insurance brokers and claims handlers acting as intermediaries - exempt from VAT
• Insurance purchased alongside goods or services but provided as a separate service - exempt from VAT