Work out the correct rate of VAT

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In response to the ongoing coronavirus outbreak, the Government has announced a temporary reduction in VAT from 20% to 5% for some goods and services supplied by the tourism and hospitality sectors. The reduced rate is in force for six months from 15 July 2020 to 31 March 2021 and applies to supplies of food, non-alcoholic drinks, tourist accommodation and attractions.

VAT-registered businesses charge VAT on sales of most goods and services at the appropriate rate and pay the VAT they have charged to HM Revenue & Customs (HMRC).

VAT is generally charged at the standard rate of 20%. There is a reduced rate of 5% which is charged on items including energy-saving materials, mobility aids and sanitary protection products. A zero rate also applies to some goods and services such as food and drink (although confectionary, hot food, take aways and alcoholic drinks all attract the standard rate of 20% VAT).

VAT is not charged on goods and services that are exempt from VAT or those which are outside the scope of UK VAT. You can also zero rate goods and services which are exported outside the European Union.

The rates applicable may only apply if certain conditions are met, or in particular circumstances such as:

  • who’s providing or buying the goods
  • where they have been provided
  • how they've been sold
  • whether you have the necessary evidence and kept the right records

Other conditions may apply.

The VAT rules are different depending on which type of business you are running.

This guide from HMRC explains VAT rates on different goods and services.

Note: you can also find a full list of VAT notices on the GOV.UK website.

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