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UK VAT 2026 — 20% Standard Rate, £90,000 Threshold & Returns
The UK left the EU VAT system in 2021 but kept a familiar 20% standard rate. Here is every rate, threshold, return deadline and penalty rule for 2026 — plus what EU businesses must do differently when selling to Britain.
2026 UK VAT Rates at a Glance
| Rate | Percentage | Applies To |
|---|---|---|
| Standard | 20% | Most goods and services |
| Reduced | 5% | Domestic energy, renovations, mobility aids, children's car seats |
| Zero rate | 0% | Most food, books, newspapers, children's clothes, public transport |
| Exempt | — | Insurance, finance, health, education, charity fundraising |
Last verified: 26 September 2026. Sources: HMRC VAT rates guidance and notices. Confirm with HMRC or your accountant before filing.
Official sources: HMRC VAT registration · HMRC VAT number checker
Registration: The £90,000 Threshold
Returns, Deadlines & the Points Penalty System
UK VAT returns are usually quarterly, due 1 calendar month plus 7 days after the period ends — payment by the same date. Since April 2022 every return must go through Making Tax Digital compatible software; paper and portal typing are gone.
Since January 2023, late filing runs on penalty points: each late return earns one point, and hitting the threshold (4 points for quarterly filers) triggers a £200 penalty, with further penalties for continued lateness. Late payment carries separate percentage-based penalties that rise with days overdue — so file on time even if you cannot pay in full, then arrange a payment plan.
EU Businesses Selling to the UK Since Brexit
- No reverse charge on goods: EU sellers need a GB EORI number and face UK import VAT (use Postponed VAT Accounting to avoid paying at the border).
- £135 consignment rule: B2C goods consignments of £135 or less are taxed at the point of sale (seller charges 20% UK VAT); above £135, normal import rules apply.
- No VIES: GB VAT numbers cannot be checked in the EU VIES system — use HMRC's checker and keep the proof.
- Northern Ireland exception: goods sales to NI (XI prefix) still follow EU cross-border rules.
Step-by-step registration, EORI and customs in one place: our selling to the UK after Brexit guide.
Late Payment Interest (UK Rules)
UK statutory interest is the Bank of England base rate plus 8%, with tiered recovery fees (£40 up to £1,000; £70 to £10,000; £100 above). Compute any overdue invoice with the Late Payment Calculator.
What counts toward the £90,000 threshold
The registration test is where most UK VAT confusion starts, because the threshold applies to a rolling 12-month period rather than a financial year.
In broad terms, most takings count — sales of goods and services, whether paid in cash or by card, and sales to customers in other EU countries. Income that normally sits outside the test includes things like loans, capital introduced by an owner, and income that is not a supply of goods or a service. The HMRC pages below set out the exact treatment for your circumstances, which matters when you are close to the line.
Two practical consequences follow from it being a rolling test rather than a yearly one:
- A single strong month can take you over the threshold even in your first year, and you are then liable from the day you crossed it — not from the next quarter.
- Because the test keeps moving, coming back under the threshold does not automatically un-register you. Deregistration has its own conditions and its own threshold.
If turnover is close to £90,000, checking every quarter is safer than checking once a year. Confirm how your specific income is treated before you rely on that.
Which VAT scheme might you be on?
Registration is only the first decision. How you account for VAT afterwards changes your paperwork, and it is much harder to move between schemes than it is to change your mind before you start.
- Standard scheme — the default. You track input VAT on purchases, reclaim it against output VAT, and account for the difference on each return. Most businesses that make VATable supplies and buy from VAT-registered suppliers end up here.
- Flat Rate Scheme — available to many smaller businesses. You calculate VAT as a flat percentage of your turnover instead of tracking input VAT, which suits businesses with few purchases from VAT-registered suppliers. In exchange you cannot reclaim input VAT, and some items become exempt. The percentage bands change, so check the current ones before assuming a rate.
- Cash accounting scheme — for businesses with turnover below a set limit, VAT is accounted for when you get paid rather than when you invoice. This can suit businesses with irregular payment terms, or with a gap between invoicing and receiving.
Two things are worth checking before you commit: whether your buyers are mostly VAT-registered (which makes input VAT tracking more valuable), and whether your customers pay on credit (which makes cash accounting more useful). The HMRC guidance linked on this page covers the current eligibility rules for each scheme.
Worked example: two invoices, two rates
The standard and reduced rates apply to different supplies, so a single month can produce both on the same invoice run. VAT is added on top of the net amount, not taken out of it.
| Supply | Net | Rate | VAT | Total on invoice |
|---|---|---|---|---|
| Consulting services (standard) | £1,200.00 | 20% | £240.00 | £1,440.00 |
| Energy efficiency work (reduced) | £500.00 | 5% | £25.00 | £525.00 |
| Month total | £1,700.00 | — | £265.00 | £1,965.00 |
The VAT owed for the period is £265.00, not the invoice total. If the business had input VAT of £90.00 on purchases in the same period, the amount payable on the return would be £265.00 minus £90.00, or £175.00. Input VAT can only be reclaimed on costs that relate to taxable supplies, which is exactly the distinction the Flat Rate Scheme removes.
Frequently Asked Questions
What is the UK VAT rate in 2026?
The UK standard VAT rate is 20% in 2026. A reduced rate of 5% applies to domestic energy, renovations and certain goods; a zero rate applies to most food, books, children's clothes and public transport.
What is the UK VAT registration threshold?
You must register when taxable turnover exceeds £90,000 in any rolling 12-month period. Deregistration is possible below £88,000, and voluntary registration is allowed at any level.
When are UK VAT returns due?
Usually quarterly, due 1 calendar month plus 7 days after the period ends, with payment by the same deadline — filed through Making Tax Digital software.
How do UK VAT late penalties work?
A points-based system applies since January 2023: late returns earn points, and reaching the threshold triggers a £200 penalty. Late payment carries separate percentage penalties.
Can I check a UK VAT number in VIES?
No. GB numbers left VIES at Brexit. Use HMRC's VAT number checker and archive the result.
Does Northern Ireland follow UK or EU VAT rules?
Both: UK rules for services, EU rules for goods under the XI prefix. EU sellers treat NI goods sales as intra-EU supplies.
Disclaimer: General information only — not tax advice. Confirm with HMRC or a UK accountant. Current as of September 2026.