Standard, reduced and zero rate: which applies?
The UK has three rates of VAT: 20%, 5% and 0%. Learn what each one is for and work out the VAT on a sale at each rate.
This path is practice in how the records and the sums work. It is not tax advice. Any rate or allowance in a question is an example for that question, so check GOV.UK for the current figures.
In this room: 2 tasks, 7 questions
- Three rates3 questions
- Zero rate is still a rate4 questions
A sale that VAT applies to is called a taxable supply. Every taxable supply carries one of three rates.
- Standard rate, 20%
- most goods and services
- Reduced rate, 5%
- a short list, such as children's car seats, and gas and electricity for a home
- Zero rate, 0%
- a longer list, such as most food, books, and children's clothes and shoes
The rate depends on what is sold, not on who sells it. The lists are set by law and are published on GOV.UK.
Answer the questions below
2 more questions follow in this task.
A zero rated sale is still a taxable supply. The rate is 0%, so the VAT on it is nil.
- The sale is still written in the VAT records
- It still counts as a taxable sale
- The seller can still claim back the input tax on its own costs
| Item | VAT rate | Net |
|---|---|---|
| Pushchair | 20% | 350.00 |
| Children's car seat | 5% | 120.00 |
| Children's coats | 0% | 90.00 |
Answer the questions below
3 more questions follow in this task.