The standard rate of Value Added Tax (VAT) in the UK is currently 20%. This rate applies to most goods and services, such as clothes, electronics, hotel stays, consultancy services etc. However, there are some goods and services that are charged at a reduced rate of 5% VAT. These include children’s car seats, home energy supplies, mobility aids for elderly or disabled people, and some construction services like conversions and renovations. The reduced rate is intended to make these essential items more affordable. Some goods and services are zero-rated, meaning they are charged at 0% VAT. Major categories of zero-rated supplies are: Most food items meant for human consumption, except hot takeaway food. This includes basic grocery items, dairy products, fruits and vegetables. Books, newspapers, magazines and other printed publications. Construction of new houses and buildings. This excludes renovations or extensions. Passenger transport services like buses, trains, flights, taxis, etc. Prescription drugs and medicines, medical equipment. Children’s clothing and footwear. Exports to countries outside the UK. Being zero-rated allows businesses to reclaim VAT paid on associated costs while not charging any VAT on the final product. There are also some goods and services that are exempt from VAT altogether. VAT is not charged on them, but the related input VAT cannot be reclaimed either. Common examples are insurance policies, financial services, rental of residential property, postal services, education, etc. The zero, reduced and standard VAT rates can change with every annual budget. However, the standard rate has remained stable at 20% in recent years. HMRC publishes notices well in advance when any changes are proposed.