VAT Tax in the UK – registration, rates and declarations

VAT Tax in the UK – registration, rates and declarations
Marek Cieślak

Marek Cieślak

CEO CGO Finance

VAT tax in the UK is extremely important for companies that trade or provide services in the country. If you are planning to expand into the British market, see what VAT in the UK entails. Below you will find information on its registration, rates and declarations.

Table of Contents

What is VAT Tax in the UK?

VAT (Value Added Tax) applies to most goods and services sold in the UK. It is charged at every stage of production and distribution. The final consumer bears the cost. Businesses must meet specific requirements regarding VAT registration and reporting.

VAT Tax in the UK in 2025 – Registration

VAT registration in the UK is mandatory for companies that:

  • exceed an annual turnover threshold of 90 000£;
  • import goods from outside the UK,
  • provide services to companies or clients in the UK.

The registration process involves the following steps:

  1. apply online on the HMRC platform,
  2. prepare detailed data on business activity,
  3. receive a UK VAT number, which must be included on invoices and VAT returns.
VAT tax in the UK

VAT Tax in the UK in 2025 – Rates

In the United Kingdom, there are three VAT rates.

The standard VAT rate in the UK is currently 20% and has been in effect since 2011.

The reduced VAT rate in the UK is 5%. It applies to certain types of business activities, which are considered socially beneficial. Hence, the government supports them in the form of preferential taxation.

In the UK, several major product categories are subject to a zero VAT rate. It concerns food and beverages, health, social care, charities, transport of goods and passengers.

VAT rateValueExamples of goods and services
Standard20%most goods and services, including clothing, electronics, fuel
Reduced5%– car seats for children – certain social housing projects – certain social services – supply of electricity, natural gas and district heating networks, but only for domestic use – certain energy-saving items used for domestic use – LPG and heating oil used in households – certain types of renovation in private homes – certain types of medical equipment intended for disabled people
Zero0%– domestic and international passenger transport – newspapers and magazines – basic unprocessed food – water supply – certain medical articles – certain children’s products – livestock – animal feed

Some products and services are exempt from VAT, for example:

  • entrance fees to certain cultural events (museums, art exhibitions, zoos and performances)
  • care or treatment provided by a qualifying institution (hospital, hospice or nursing home)
  • health services provided by registered doctors, dentists, opticians, pharmacists and other health professionals,
  • education, vocational training and other related services provided by an authorised body (school, college or university).
VAT tax in the UK

VAT Returns in the UK in 2025

Businesses registered for VAT in the UK must file returns through the Making Tax Digital (MTD) system.

Type of operationDeadline
Filing VAT returnsquarterly or monthly
Paying VATup to one month after the end of the settlement period

The declaration should include:

  • value of sales and purchases subject to VAT,
  • VAT charged and reclaimed,
  • amount due to be paid or refunded.

Importantly, all VAT payers in the UK are covered by MTD regulations. This means that it is your responsibility to keep full documentation in digital form.

VAT tax in the UK

Consequences of Non-Compliance with VAT Regulations

Failure to comply with VAT regulations in the UK can lead to:

  • financial penalties calculated as a percentage of tax arrears,
  • HMRC tax audits,
  • loss of the right to deduct VAT.

Do you know what are tax procedures and how can you benefit from them? You’ll find everything in this article.

VAT Tax in the UK in 2025 – Summary

Knowing VAT rules in the UK is the key to avoid tax problems and optimize operating costs. Regular filing and accurate reporting are mandatory for all VAT-registered businesses in the UK.

Contact our experts for support with VAT registration, filing returns, and maintaining records in compliance with HMRC requirements.

FAQ – question and answers on topic: VAT Tax in the UK in 2025

What is VAT Tax in the UK?

Value-added tax, covering most goods and services in the UK.

Who needs to register for VAT in the UK?

Companies that have an annual turnover of more than 90 000£, or provide services subject to VAT.

How to register for VAT in the UK?

Registration is done via the HMRC website.

What are the VAT rates in the UK?

Standard (20%), reduced (5%) and zero (0%).

What does the Making Tax Digital (MTD) system include?

Electronic submission of VAT returns via the HMRC platform.

Do all companies have to register for VAT?

No, the obligation applies to companies that meet certain conditions.

How often are VAT returns submitted?

Most often quarterly, in some cases monthly.

What are the consequences of not registering for VAT?

Financial penalties, inspections and loss of the right to deduct VAT.

Is it possible to reclaim VAT on business purchases?

Yes, if they are related to activities subject to VAT.

Where can I find more information about VAT in the UK?

On the official HMRC website and with tax specialists.

Featured expert

Marek Cieślak

CEO CGO Finance