UK VAT Guide for 2026: Rates, Registration & Compliance
The UK's standard VAT rate is 20%, with reduced 5% and 0% bands. This guide covers the £90,000 registration threshold, VAT on imports post-Brexit, digital-services rules, and Making Tax Digital filing.
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Key Takeaways
The UK's standard VAT rate is 20%, with a reduced 5% rate for domestic fuel and a 0% rate for most food, children's clothing, and books — and since Brexit the UK sits outside the EU VAT and OSS system (except Northern Ireland for goods). A UK-established business registers once taxable turnover exceeds GBP 90,000 over any rolling 12-month period (or expects to within 30 days); an overseas business with no UK establishment must register as soon as it makes taxable supplies, with no threshold. SaaS, apps, streaming, and downloaded software are taxable at 20% (e-books are zero-rated); financial services, insurance, and some property and education supplies are exempt.
Taxability Snapshot
SaaS
Taxable
Digital Goods
Taxable
Clothing
Zero-rated (children's)
Groceries
Zero-rated
Sales Tax Rates
The UK's standard VAT rate is 20%, applied to most goods and services. A reduced 5% rate covers domestic fuel and a few other items, and a 0% rate applies to most food, children's clothing, and books. HMRC administers VAT, and since Brexit the UK is outside the EU VAT and OSS system.
Rate | Applies to |
|---|---|
Standard 20% | Most goods and services |
Reduced 5% | Domestic fuel, children's car seats, others |
Zero 0% | Most food, children's clothing, books |
United Kingdom VAT Calculator
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United Kingdom · VATRates as of September 2026. Source: HMRC: VAT rates (opens in a new tab).
United Kingdom · Standard rate
20%
VAT rate
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This is an estimate. Whether a sale is taxable, and at which rate, depends on what you sell, who you sell to and where it's supplied. If you intend to rely on these rates, please use the Kintsugi platform.
Registration & nexus threshold
The UK uses a VAT registration threshold rather than US-style economic nexus. A UK-established business must register once taxable turnover exceeds GBP 90,000 over any rolling 12-month period, or if it expects to exceed it in the next 30 days [2]. An overseas business with no UK establishment must register as soon as it makes taxable supplies in the UK, with no threshold [2]. Registration steps are in the How to Register section.
Filing frequency & deadlines
Most businesses file VAT quarterly through Making Tax Digital (MTD)-compatible software, with returns and payment due one month and seven days after the period ends. Digital record-keeping is mandatory for all VAT-registered businesses.
Exemptions
Most food, children's clothing, books, and newspapers are zero-rated. Financial services, insurance, and some property and education supplies are exempt. SaaS, apps, streaming, and downloaded software are taxable at 20%; e-books are zero-rated.
Penalties
Failure to register on time is treated as a "failure to notify" and penalised as a percentage of the potential lost VAT: up to 30% for non-deliberate failures (and nil if you tell HMRC unprompted within 12 months of the VAT falling due), 20% to 70% for deliberate failures, and 30% to 100% where deliberate and concealed [8]. A points-based regime penalises repeated late returns, and interest accrues on late payments.
Sources
[2] GOV.UK — Register for VAT (GBP 90,000 threshold; overseas businesses nil threshold)
[7] GOV.UK — Disagree with a tax decision (statutory review; First-tier Tribunal)
[8] GOV.UK — Penalties for failure to notify (CC/FS11; Compliance Handbook CH72740)
Verified July 2026 against GOV.UK / HM Revenue & Customs guidance.
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