VAT for businesses.

What is VAT?

VAT is charged on taxable sales and may be reclaimed on eligible business purchases. A business normally accounts for VAT through VAT Returns.

For the 2026 to 2027 tax year, the standard rate is 20%, the reduced rate is 5% and the zero rate is 0%. Some supplies are exempt rather than zero-rated.

When should a business register for VAT?

Registration is normally required when taxable turnover goes over £90,000 in a rolling 12-month period, or is expected to go over £90,000 in the next 30 days. The deregistration threshold is £88,000. Voluntary registration is also possible.

How do you charge VAT?

Once registered, the business must use the correct VAT treatment for its supplies, issue compliant VAT invoices where required and keep evidence for the treatment used. VAT is not automatically 20% on every transaction.

How do VAT Returns work?

A VAT Return reports the VAT charged on sales and the VAT reclaimed on eligible purchases. For most quarterly returns, the online submission and payment deadline is one calendar month and 7 days after the accounting period ends.

Business responsibilities

• Keep accurate VAT records and digital records where Making Tax Digital applies.
• Use the correct VAT treatment for each supply.
• Submit VAT Returns on time, even where no VAT is due.
• Pay VAT due by the deadline.
• Keep registration details and contact information up to date.

Related guides.

Check rates, thresholds and deadlines for the correct tax year before you rely on them.