VAT DUTIES: The United Kingdom has three rates of VAT and duties.
- Standard Rate: 20% VAT on the vast majority of goods that we buy in shopping and services.
- Reduced Rate: 5% VAT on selected goods and services. Examples of reduced VAT rates include some home energy-saving materials and child car seats.
- Zero Rate: 0% VAT applies to all zero-rated goods and services (e.g. child clothing and most food products).
There are different rates of VAT on certain goods and services. Some are exempt from VAT altogether, such as Lottery tickets and postal services. Others are zero rated like children’s books, clothes, and newspapers.
Note: Apart from a few exceptions, Value Added Tax gets included to the price that you see in the shops.
VAT for Disabled Persons
If you are a disabled person or have a long-term illness VAT is not charged on certain disability products and services. But, the items must be for your own personal use.
Duties and Taxes on Shopping
This section covers the different taxes paid on:
- Alcohol and tobacco products.
- Fuel used in vehicles and heating (e.g. petrol and diesel).
- Gambling including online betting and lottery tickets.
- Insurance (e.g. car, pet, and foreign travel insurance).
- Short haul and long haul flights.
- Goods brought into the country that are over the customs allowance.
Places You Will See VAT
In the Shops
When you buy items in a shop the price includes any VAT that is payable. Thus, the seller cannot add tax when you go to pay.
Some places offer tax-free shopping facilities. The price tag will show both the price excluding and including tax. Tax refunds are only available to EU residents who leave the EU zone for 12 months or more, and tourists from outside the EU.
In Adverts, Catalogues, and Price Lists
The price shown depends on which section of the community it is for. For the general public only, all prices shown will include Value Added Tax.
If they are for a mixture of general public and businesses, the bill shows both the price including and excluding the tax. As a rule, those aimed at businesses only do not include VAT. It will get charged on top of the price published.
On Bills and Receipts
On some receipts you get the VAT shown on a separate line. You may have seen it on your supermarket bill. It does not mean that you are being charged extra. The bill is a breakdown of the tax amount for the goods sold.
Invoices from VAT registered companies must show the VAT separately from the total amount charged. It must also include their company VAT registration number. Some typical examples would include builders, painters, and car mechanics.
How VAT gets Worked Out
When a company charges you a ‘Gross Price‘ it will be their sales price plus the tax. They calculate this amount by multiplying their sales price by specified UK VAT rates.
An Example: The selling price is £300 and the tax is 20%. 300 x 20% = 60, so the gross price is 300 + 60 = £360. The quick way 300 x 1.20 = £360.
Note: What if you want to work out the tax amount you got charged? First of all, you will need to know the tax applied. Take the gross price divided by 1.(tax percent). In the above example, 360 / 1.20 = £300.
ALSO IN THIS SECTION
Tax Free Shopping
Those who are eligible can enjoy a spell of tax free shopping in the United Kingdom. Check how to get a VAT refund and which goods are not eligible for refunds.
Air Passenger Duty (APD)
There is an excise duty charged on the carriage of passengers called Air Passenger Duty. The page lists the three different rates of APD tax in the United Kingdom.
Alcohol and Tobacco Excise Duties
UK Government levy an excise tax (sin tax) on some goods rated harmful to society. Check a list of current duty rates on alcohol and tobacco – two of the most popular.
Tax on Fuel
Buying petrol, diesel, or other fuels used for heating or vehicles is a daily occurrence for many. Check the list to see how the price of common fuels includes the Fuel Duty.
We often see an increase in gambling duties in the United Kingdom annual Budget. Check the guide listing the current gaming duty bands and gambling duty rates.
Insurance Premium Tax (IPT)
General insurance premiums are subject to an indirect tax called Insurance Premium Tax. The page lists current IPT tax rates in the United Kingdom.
VAT on Energy Saving Materials
The UK Government made some changes to the reduced rate of VAT on energy saving products in 2016. Check which energy saving materials still qualify for the lower rate.
VAT on Mobility Aids
A lower rate of VAT applies to a range of mobility aids if you are over 60 years old. But, you must pay to get them supplied and installed to get the reduced VAT on mobility equipment.