Standard Rate VAT
The main VAT rate of 20% applied to most goods and services sold in the UK by VAT-registered businesses. Standard-rated businesses must charge 20% VAT on their supplies and can reclaim VAT on their business purchases. Most consumer goods, professional services, and business-to-business transactions are subject to the standard rate.
How it works
The standard rate is the default: unless a supply is specifically listed as reduced-rated, zero-rated, or exempt, it's charged at 20%. This applies whether the transaction is a consumer sale or a business-to-business one, though prices are often displayed VAT-inclusive to consumers and exclusive between businesses.
VAT-registered businesses must charge the correct 20% on standard-rated sales and can reclaim the VAT they paid on their own business purchases, keeping proper records under HMRC's Making Tax Digital requirements. Registration is mandatory once taxable turnover passes the VAT registration threshold of £90,000, though businesses below that can register voluntarily.
VAT is set entirely at UK level, so the standard rate applies identically in England, Scotland, Wales, and Northern Ireland — there is no Scottish variation, unlike income tax.
Example: standard-rate VAT on a business sale
A business sells a service for £500, excluding VAT.
Standard-rate VAT is £500 × 20% = £100.
The customer pays £600 in total, and the business remits the £100 to HMRC, minus any VAT it can reclaim on its own purchases.
Frequently asked questions
Do I have to charge 20% on everything I sell?
Not necessarily — only supplies that don't qualify for the reduced or zero rate, and aren't exempt, are charged at the standard 20% rate, so classification matters for each item you sell.
Can I register for VAT below the £90,000 threshold?
Yes, voluntary registration is allowed below the threshold, which can be worthwhile if you have significant VAT on business purchases you'd like to reclaim.
Does the standard rate differ in Scotland?
No, VAT is set entirely at UK level and the 20% standard rate applies uniformly across all four nations, unlike income tax which has separate Scottish bands.
Related Terms
Value Added Tax
A consumption tax charged at each stage of production and distribution on goods and services, with the final burden falling on the end consumer.
Reduced Rate VAT
A 5% VAT rate applied to certain goods and services deemed essential or beneficial, including domestic fuel and power, children's car seats, and some energy-saving materials.
Zero Rate VAT
A 0% VAT rate applied to certain essential goods and services, including most food, children's clothing, books, and prescribed medicines.
VAT Registration Threshold
The level of taxable turnover above which businesses must register for VAT, currently £90,000 per rolling 12-month period.
VAT Return
A periodic report that VAT-registered businesses must submit to HMRC, typically quarterly, showing the VAT they have charged customers and the VAT they have paid on purchases.
Flat Rate Scheme
A simplified VAT accounting method for small businesses with an annual turnover below £150,000, where you pay a fixed percentage of your gross turnover to HMRC instead of accounting for input and output VAT separately.
Try the calculator
Use our free tool to see how standard rate vat affects your tax.