VAT rate – What is a VAT rate?

Updated on July 4, 2022

  • The VAT rate refers to the amount of VAT that’s placed on a product or service.

    Create, send and track your invoices for free with SumUp Invoices.

    The VAT rate is given as a percentage and must be recorded on a VAT invoice.

Different VAT rates in the UK

Depending on the type of product or service, multiple VAT rates may apply in the UK. The regular VAT rate, the lowered VAT rate, and the zero VAT rate are the three types of VAT rates. The VAT is not applied to all products and services.

Standard VAT

The standard VAT rate in the United Kingdom is currently 20% for goods and services. When the VAT rate on an item is 20%, the consumer will pay $120 to the merchant for a product that costs $100. In this case, the business retains £100 and pays the government £20.

Reduced VAT rate

Certain items, such as sanitary products, energy-saving measures, and child car seats, have a reduced VAT rate.

These items are presently eligible for a 5% lower VAT rate. The vendor gets £50 and the government gets £2.50 for a purchase of $52.50 at a reduced VAT rate.

Zero VAT rate

Another option is to pay nothing. These things are free of charge, as the name implies.

Life necessities are exempt from the zero-rate. Most food, books, newspapers, medical supplies, prescription medications, and children’s clothing fall under this group. Despite the fact that some items are exempt from VAT, you must still include them on your VAT return.

VAT exempt

Some goods and services are free from VAT, as well. Postage stamps fall under this umbrella. You don’t have to keep track of them because they’re exempt and not zero-rated, so you don’t have to include them in your taxable turnover when calculating your VAT.

Applying a VAT rate to an invoice with SumUp Invoices

Using SumUp Invoices, you can easily apply the correct VAT rate to your invoices. When billing a consumer in the United Kingdom, you can expect to pay 20%. Using the drop-down menu under ‘VAT’, you’re then able to edit this if your invoice is for something where the standard VAT rate doesn’t apply, for example, medical equipment.

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