VAT in the United Kingdom is a topic that remains highly relevant—especially among entrepreneurs working with the British market and consumers shopping abroad. Since the UK left the European Union, the system now operates under somewhat different rules than in EU countries, but its basic principles remain quite similar. VAT in the UK (Value Added Tax) is a tax on added value applied to most goods and services offered on the local market, as well as on imports.
In this article, we will take a detailed look at the VAT applicable in the UK in 2025, the available rates, cases when reduced rates or exemptions apply, and what you need to know about VAT registration and reporting in the UK. This information is useful not only for businesses but also for individuals who want to understand how the tax system works in this country.
VAT Rates in the UK – Current Data for 2025
Currently, there are three main VAT rates in the UK, applied depending on the type of product or service. The standard VAT rate is 20%, which covers most goods and services—it’s the rate you will most often see on receipts and invoices. So, if you’re wondering what the VAT rate is in the UK for electronics, cosmetics, business services, or home equipment, the answer is 20%.
The next rate is the reduced rate of 5%, which applies to selected products related to health protection, energy efficiency, or child safety, such as energy-saving installations or child car seats. It’s important to note these are exceptions; the standard rate applies in most cases.
The third rate is the zero rate (0%), which technically applies VAT but charges no tax on sales—though the seller can reclaim VAT on purchases related to those sales. Examples of zero-rated items include most food and non-alcoholic drinks, printed books, children’s clothing, and exports outside the UK.
UK VAT after Brexit – What Has Changed?
After leaving the European Union, the UK introduced its own VAT regulations. This means UK VAT now operates independently from the EU system. This change is significant for businesses from Poland and other EU countries—every sale to the UK requires careful checking of whether and when VAT registration in the UK is necessary. In practice, this means additional formalities, especially with importing and exporting goods. Customs clearance is often required, and VAT must be charged according to local UK rules—regardless of the seller’s home country rates. The UK treats EU member states as it does any other non-EU country.
VAT Registration in the UK – Who Must and Who Can Register?
The obligation to register for VAT in the UK applies to all businesses whose annual turnover in the country exceeds £90,000. This is the official registration threshold for 2025. If a company conducts regular sales in the UK—whether it has a local presence or operates remotely—it should monitor its turnover and register once the threshold is exceeded.
However, many companies choose to register voluntarily before reaching the threshold. This allows them to reclaim VAT on purchases and can enhance credibility with business partners and customers. Voluntary registration is common, especially in e-commerce and B2B sales.
VAT and E-commerce – Rules for Online Sellers
For many entrepreneurs from Poland, the key question is how VAT works in the UK for online sales. After Brexit, companies selling goods directly to individual customers in the UK (B2C) must account for UK VAT regardless of turnover. If a company uses warehouses located in the UK, VAT registration is mandatory. When selling through platforms like Amazon or eBay, part of the VAT responsibilities may fall on the platform operator—but not always. It’s essential to carefully review your business model.
In practice, this often means:
Registering for VAT in the UK,
Charging local VAT rates on sales to UK customers,
Filing VAT returns with HMRC,
Maintaining records according to UK legal requirements.
Which Goods and Services Are Exempt from VAT?
Not everything in the UK is subject to VAT. There is a list of goods and services exempt from VAT—but note that exemption is not the same as a zero rate. When exempt, sellers do not charge VAT but cannot reclaim VAT on related purchases. Exemptions include medical services, education, certain financial and insurance services, and residential property rentals. This is important for companies operating in these sectors for accounting and pricing strategy reasons.
UK VAT Obligations After Registration
Once registered for UK VAT, a business must keep records of sales, issue VAT invoices according to UK regulations, and file periodic returns with HMRC. Usually, these are quarterly returns submitted electronically. The Making Tax Digital system requires digital record-keeping. Companies must ensure timely filings, apply correct rates, and provide accurate transaction descriptions. HMRC audits are common, especially for foreign businesses, so it’s good practice to work with a local tax agent or specialized consultancy.
What Is the VAT Rate in the UK in 2025?
To summarize the key points:
The standard VAT rate in the UK is 20%,
The reduced rate is 5%,
The zero rate (0%) covers food, children’s clothing, printed books, and more,
The VAT registration threshold is £90,000,
VAT is overseen by HMRC,
VAT returns are submitted online through the Making Tax Digital system.
If you want to know the VAT rates for specific transactions or how VAT works in the UK in 2025, these are the ranges to keep in mind. Staying up to date and consulting official sources or specialists is highly recommended.