VAT
Consumption tax on most goods and services; the UK standard rate is 20%.
VAT is a tax on spending that registered businesses ADD to the price of most goods and services and pay to HMRC. The UK standard rate has been 20% since 4 January 2011; Chancellor John Healey ruled out raising it on 7 September 2026.
Last refreshed: 7 October 2026 · Appears in 1 active topic
Timeline for VAT
Ruled out of any rise by Chancellor John Healey on 7 September
Is Britain Actually Broke?: Mentioned in: Healey rules out three big tax risesMentioned in: Spain moves to close the temporada gap
Nomads & CommunitiesBackground
VAT is the UK's third-largest tax, behind income tax and National Insurance contributions. The Office for Budget Responsibility expects it to raise about £180bn in 2025-26, roughly 15% of all receipts. On 7 September 2026 Chancellor John Healey ruled out raising VAT, income tax or corporation tax ahead of his first Budget on 28 October.
The standard rate of 20%, in force since 4 January 2011, covers most goods and services. A reduced rate of 5% applies to items such as home energy and children's CAR seats, and a zero rate to most food and children's clothes. Some supplies, including financial transactions and postage stamps, are exempt. A business must register once its taxable turnover over the previous 12 months passes £90,000, the threshold since 1 April 2024.
Governments elsewhere in Europe move VAT rates in both directions. Bruegel reported on 5 May 2026 that about €8.3bn of the more than €11bn European governments had committed to energy-price relief went on untargeted VAT and excise cuts. In June Spain's government announced plans to raise VAT on tourist flats from 10% to 21%.
What is the VAT rate in the UK?
When does a business have to register for VAT?
Will VAT go up in the October 2026 Budget?
How much money does VAT raise in the UK?
