VAT rates for goods and services
| % of VAT | What the rate applies to | |
|---|---|---|
| Standard rate | 20% | Most goods and services |
| Reduced rate | 5% | Some goods and services, eg children’s car seats and home energy |
| Zero rate | 0% | Zero-rated goods and services, eg most food and children’s clothes |
Is VAT going to be abolished?
In theory the UK could abolish VAT after Brexit, but in practice it is very unlikely. The government’s technical guidance for businesses preparing for the end of transition indicates the government plans to continue to have a VAT system in the UK.
Will the UK reduce VAT?
General description of the measure The government announced on 8 July 2020 that it intended to legislate to apply a temporary 5% reduced rate of VAT to certain supplies relating to hospitality, hotel and holiday accommodation and admission to certain attractions.
What is the VAT rate UK 2021?
The Chancellor announced at Budget 2021 that the temporary reduced rate of 5% will be extended to 30 September 2021. From 1 October 2021 the reduced rate for these supplies will be replaced by the introduction of a new reduced rate of VAT of 12.5% which will remain in effect until 31 March 2022.
How are services exempt from VAT in the UK?
Most services, supplies, and goods you supply to countries outside the EU are considered outside the scope of UK VAT and therefore exempt. These goods and services only feature on your VAT return in the ‘total value of sales’ section. This kind of transaction is called an export, instead of the EU ‘dispatch.’
How does VAT work in the UK compared to the US?
Compared to the United States, the UK VAT rates are simple and charged the same throughout the UK: 5% reduced rate for some goods and services (e.g. electricity, children’s car seat, and smoking cessation products) 0% zero-rated goods and services (e.g. most food & drink products, children’s clothes, and flights)
Do you need a VAT number to sell in the UK?
Both B2B and B2C businesses selling goods to the UK will be required to register for a VAT number with Her Majesty’s Revenue and Customs (HMRC). For B2B businesses, this obligation is not required if the UK shopper provides their VAT registration number.
When does VAT go into effect in the UK?
Coinciding with Brexit, on January 1, 2021, the government of the United Kingdom implemented changes to the Value-Add Tax (VAT) for goods being shipped into the UK. If you sell goods to customers in the UK, you may have already taken the necessary steps to adhere to the new VAT rules. However, if you haven’t started, time is of the essence.
