UK VAT rates

Most business transactions involve the purchase of products to which different rates of VAT apply. The applicable rate depends on the type of product and, on occasions, the purpose to which it will be put. There are currently three different rates of VAT, the standard rate (20%), a reduced rate (5%) and a zero rate:

Standard - 20% 
This is the most common rate and will apply to most of the products purchased.

Utility Rate - 5% 
This rate is applied to the purchase of utilities eg domestic fuel or power. Click here for more information on utiliy rates. Colleges may have to prove its charitable status to receive the 5% rate.

Zero Rate - 0
This is where the product is subject to VAT but the current rate is set at 0%. Examples here include books, air travel etc.
It is impractical to list all the areas were products have a VAT rate of 0% or may be zero-rated ie the need to pay is waived. Guidance will be available from your Finance Department.

Because the further education institutions are registered charities it is possible to zero-rate a certain purchases. To do so, a completed Zero-Rating Certificate must be enclosed with the order.

Exempt Rate - 0% 
This is where the product is exempt from VAT. For examples such as education services purchased from another educational institution please click here.

Not applicable Rate - 0% 
This is where another form of taxation applies. For example, the payment of salary and wages where personal taxation applies.