Skip to main content
We're here with practical tax information for your business. Find out about business taxes, tax planning and more.

Search

  1. Home
  2. VAT

Tax rates and tax thresholds

We've scoured the web to get you the most up-to-date advice which includes the most useful tools on offer from the officials themselves.

Business tax planning

Effective tax planning is essential if you are to minimise your tax bills. Simple tax planning can significantly reduce your tax liabilities.

Tax self-assessment

The self-assessment tax return is an unavoidable burden if you are liable for self-employed tax or have complicated income tax affairs.

Corporation tax

Corporation tax is charged on a company's profits. If you trade as a limited company, ensure that paying this tax is as painless as possible.

National Insurance

National Insurance Contributions (NICs) are payable whether you are self-employed or employed by your own company, although different rates apply.

Payroll and benefits

As well as your legal obligations, you’ll want to ensure that payroll is painless and that you use any opportunities to improve your tax-efficiency.

VAT

Effective VAT planning aims to ensure that VAT is relatively painless, and that you are reclaiming as much as possible of the VAT you pay.

Capital gains

Capital gains are made when you sell something for more money than you paid for it. As a result, you can be subject to tax. Take professional advice.

Commercial property taxes

Business property taxes apply to businesses with commercial premises.There are two commercial property taxes: business rates and stamp duty land tax.

Tax problems and investigations

If you have tax problems or face a tax investigation, it pays to seek professional advice and you must act rather than just hoping for the best.

What VAT applies to my type of business?

Sector-specific VAT rules

The aim of this article is to highlight the different VAT rules that apply to the 200 different types of business that are listed below; and to signpost to some of the extensive, detailed VAT information on the gov.uk website.

You can then contact the government’s VAT Helpline (0300 200 3700) - or your professional adviser - to confirm that you are following the rules correctly.

General VAT rules

The general VAT rules apply to all businesses. They specify which sole traders and businesses need to register for VAT, different VAT rates (20% standard rate, 5% reduced rate, and exempt or zero rate), how VAT should be collected and paid to the government, and so on.

Check the general rules on VAT when you start up your business, as well as the Making Tax Digital reporting rules.

Note the difference between exempt and zero rate. If you only supply exempt goods, you do not need to register for VAT regardless of your level of sales. Whereas if you only make zero rated supplies, you do have to be registered for VAT once you hit the VAT registration threshold. In both cases, the rate of VAT is 0%.

The Margin Scheme for second-hand goods

Usually, businesses buying and selling goods can recover the VAT they are charged on their purchases as input tax.

But second-hand goods are often bought by dealers and shops that are VAT registered from members of the public who are not registered for VAT, so there is no input tax to recover.

To make such trade commercially viable, there is a special VAT scheme: the Margin Scheme.

Instead of having to charge VAT on the full selling price of the item you sell, the Margin Scheme allows you to charge VAT only on the difference between what you pay for it and what you sell it for - your margin.

For example, if you buy a used item for £3,500 and sell it for £4,000, your margin is £500 and this includes the VAT due at the standard rate of 20%. To work out how much VAT is due, you apply the current VAT fraction (which is 100% plus the VAT rate, divided by the VAT rate, ie 120 divided by 20 = 6): £500 / 6 = £83.33 which is the VAT due. There is no input tax to reclaim under this scheme.

The scheme is not compulsory and you can use it alongside sales made under the normal VAT rules. However, there are certain record-keeping, invoicing and accounting requirements that you must meet if you want to use the scheme, otherwise you will have to account for VAT on the full selling price of the items.

VAT rules for your specific business

We summarise the VAT rules for 200 different types of business below. Find your sector in the list below and then look for your type of business. We also link to the key VAT notices that apply to your business in the summaries below.

Agriculture and forestry

Automotive

Business services

Construction

Consumer services

Healthcare

Hospitality and catering

Leisure industry

Manufacturing, food processing

Retail and wholesale

Transport

Farm shop

The supply of most food and drink for human consumption is zero rated so you will not need to charge VAT on many of the items you are likely to sell. However, supplies of food and drink made in the course of catering are standard rated - for example, food and drink served in your café, if you have one, or hot food and drink to take-away.

Other items that you might sell, such as ornamental plants, or crafts, are standard rated.

Further help with VAT for your farm shop:

Farm supplier

Some of the goods that you sell will be zero rated. These are products like animal feed, seeds and books.

Other items will be standard rated; for example, fertilisers, fencing, hardware and clothing.

The sale of logs and kindling is subject to a reduced rate of VAT.

Further help with VAT for your farm supplier:

Farrier

Farriery services are standard rated.

Further help with VAT for your farrier:

Livery stables

If you plan to offer stabling and livery services together as a single supply, this is exempt for VAT purposes - provided that you allocate all, or an identifiable part, of the stabling for the sole use of the horse owner.

This is an exempt supply of a right over land. The exemption also applies to the livery services (such as feeding, mucking out, worming, grooming and so on) that you provide as part of the service. (Note that this does not apply to livery packages provided by 'special purpose stables' like stud farms.)

If the supply of stabling and livery services is not an exempt right over land, then you must standard rate your supply of livery services, including any feed provided.

If you sell feed separately (for example to local horse owners with their own land and stabling), this is zero rated for VAT purposes.

Other goods and services that you offer (such as riding lessons, or sales of tack and grooming equipment) are generally standard rated.

Further help with VAT for your livery stables:

Organic farm

It is likely that most, if not all, of the produce that you sell will be zero rated.

Depending on how your business operates, it's also possible that you will make some supplies that are standard rated. These include things like bed and breakfast and self-catering accommodation, charging for farm visits, and so on.

Some supplies may also be at the reduced rate, for example sales of logs and kindling for domestic use.

As an alternative to registering for VAT so that you can reclaim VAT on your business purchases, you may consider joining the agricultural flat rate scheme. Under this scheme, instead of reclaiming VAT on inputs, you would add a flat rate percentage of 4% to everything you sell to VAT-registered customers.

Further help with VAT for organic farms:

Pig farm

See the VAT information on Organic farms.

Plant nursery

Plants which are grown for their ornamental effect, and herbs grown for medicinal rather than culinary use, are standard rated.

Any seed or bulb that generally produces items that are not fed to humans or animals is also standard rated.

The supply of plants grown to provide food either for human or animal consumption is zero rated, as is the supply of the seeds, bulbs and so on used to produce such plants.

Zero rating also applies to plants, bushes and trees which are used to produce edible fruit and to herbs used for cooking.

Further help with VAT for plant nurseries:

Poultry farm

See the VAT information on Organic farms.

Smallholding

See the VAT information on Organic farms.

Tree surgeon

Tree and horticultural services are usually standard rated for VAT purposes.

However, soft landscaping supplies (such as planting trees and shrubs, turfing and so on) and fencing work can be zero rated if done on new housing developments.

Further help with VAT for tree surgeons:

Turf supplier

Sales of turf are standard rated.

Further help with VAT for turf suppliers:

Vet

Most of the services and products your veterinary practice offers will be standard rated.

Any books you sell are zero rated.

Zero rating also applies to nutritional supplements for animals (not pets) which are considered to constitute 'animal feedingstuffs'.

In some circumstances medicinal products may be zero rated when supplied to a charity.

Further help with VAT for vets:

Car alarm fitter

The car alarms you sell and the services you provide are standard rated.

Further help with VAT for car alarm fitters:

  • VAT retail schemes. These schemes are used by businesses which deal mainly with members of the public.

Car bodyshop

The services you provide are standard rated.

One potential complication concerns MOT fees. If vehicles fail the MOT test due to problems with their bodywork, but you are not an approved MOT test centre and so you arrange for your customers' cars to be tested at an approved centre, the VAT treatment of any MOT fees is not straightforward. Seek advice on this point.

Further help with VAT for car bodyshops:

Car parts shop

Most of the things that you sell are standard rated.

However, you may sell some things that are zero rated, such as books, motorcycle helmets, bicycle helmets or protective clothing for industrial use.

You might also sell a few items that have VAT at a reduced rate. For example, children's car seats and bases are rated for VAT at a reduced rate of 5%.

Further help with VAT for car parts shops:

Car repairer

The repair services you provide, including the car parts that you sell, are standard rated.

If you are an approved MOT test centre and do not charge more than the statutory maximum fee for a MOT test, the MOT fee is treated as being outside the scope of VAT.

If you are not an approved MOT test centre and so you arrange for your customers' cars to be tested at an approved centre, the VAT treatment of any MOT fees is not straightforward. Seek advice on this point.

You can zero-rate repairs and maintenance work on a vehicle which is permanently and substantially adapted for use by a disabled wheelchair user provided:

  • the work relates to a vehicle (or the adaptation to a vehicle) that was zero-rated when originally supplied
  • you hold a valid eligibility declaration from your customer

If you deal in secondhand cars, see Used car dealer.

Further help with VAT for car repairers:

Car valeter

The valeting services you provide, and any cleaning fluids or other products that you are likely to sell, are standard rated.

Further help with VAT for car valeters:

Classic car restorer

Vehicle maintenance, repair and restoration services are standard rated for VAT (with the exception of MOT fees charged by approved testing stations, which are exempt from VAT).

If you also buy and sell classic cars, see Used car dealer.

If you are involved in MOTs, see Car repairer.

Further help with VAT for classic car restorers:

Garage

Petrol and diesel for vehicles are standard rated. So too are:

  • any vehicle repairs and servicing
  • a car wash
  • soft drinks, confectionery, ice cream
  • hot take-away food
  • Food and drink made in the course of catering - for example, if you serve meals or snacks in a café area.
  • Everyday products (eg motoring products) that you sell in a forecourt shop

Books and magazines are zero rated.

So too is cold take-away food such as sandwiches (including food that has been cooked first, such as quiche).

Further help with VAT for garages:

Motor dealer

New motor vehicles are standard rated for VAT.

However, there are several areas where complex VAT issues can arise, including:

  • deposits
  • bonuses paid to your business by your vehicle supplier
  • part exchange allowances
  • finance packages
  • warranties
  • 'stock in trade' vehicles that your business purchases outright from the manufacturer and then resells at a later date
  • vehicle hire and leasing

There is a special VAT scheme for used car sales. As with new car sales, issues such as deposits, part-exchanges and finance can give rise to complications.

Most of the other goods and services that you are likely to sell are standard rated. However:

  • charges for MOT tests are outside the scope of VAT, provided they do not exceed the statutory maximum fee
  • if you make convenience sales from a forecourt shop, some of the food products will be zero rated

Further help with VAT for motor dealers:

Motorcycle dealer

New motor vehicles are standard rated for VAT.

There are several areas where complex VAT issues can arise, including:

  • deposits
  • bonuses paid to your business by your supplier
  • part exchange allowances
  • finance packages
  • warranties
  • 'stock in trade' motorcycles that your business purchases outright from the manufacturer and then resells at a later date
  • motorcycle hire and leasing

If you sell second-hand motorcycles, you can use the Margin Scheme that is explained in Used car dealer.

As with new motorcycle sales, issues such as deposits, part-exchanges and finance can give rise to complications.

Most of the other goods and services that you are likely to sell are taxable for VAT in the normal way. However:

  • motorcycle helmets are zero rated
  • charges for MOT tests are outside the scope of VAT, provided they do not exceed the statutory maximum fee

Further help with VAT for motorcycle dealers:

Tyre fitter

Tyres and other vehicle parts and fitting services are standard rated.

(If you are involved in MOTs, see Car repairer regarding the VAT rules.)

Further help with VAT for tyre fitters:

Used car dealer

New and used cars and vans are normally standard rated for VAT (vehicles that are adapted for wheelchair users can be zero rated).

There is a special VAT scheme for used car dealers. Usually, businesses buying and selling goods can recover the VAT they are charged on their purchases of stock as input tax. But many used car dealers buy stock from members of the public who are not registered for VAT, or from unregistered dealers, so there is no input tax to recover. Instead of having to charge VAT on the full selling price of the cars you sell, the Margin Scheme allows you to charge VAT only on the difference between what you pay for the vehicle and what you sell it for - your margin.

For example, if you buy a used vehicle for £3,500 and sell it for £4,000, your margin is £500 and this includes the VAT due at the standard rate of 20% (prices included for illustrative purposes only). To work out how much VAT is due, you apply the current VAT fraction - divide the margin by 6: £500 / 6 = £83.33 which is the VAT due. There is no input tax to reclaim under this scheme.

The scheme is not compulsory and you can use it alongside sales made under the normal VAT rules. However, there are certain record-keeping, invoicing and accounting requirements that you must meet if you want to use the scheme, otherwise you will have to account for VAT on the full selling price of the vehicles.

Other goods and services that you might offer for sale are not covered by the special scheme. For example:

  • charges for MOT tests are outside the scope of VAT, provided they do not exceed the statutory maximum fee
  • new car sales are taxable for VAT in the normal way (you can reclaim any VAT that you pay when you purchase the car and must charge VAT on the whole of the selling price)
  • if you rebuild a car using used parts from several vehicles and the DVLA gives it a new registration number, you will have to pay VAT on the full selling price if you sell it
  • many other goods that you might sell, for example spare parts and motor fuel, are also liable for VAT in the normal way

Note that there are several areas where complex VAT issues can arise. These include:

  • part exchange allowances
  • finance packages
  • warranties

Further help with VAT for used car dealers:

Windscreen services

Windscreens and associated services are standard rated for VAT.

Further help with VAT for windscreen services:

Accountant

Most of the accountancy services you offer will be standard rated, but some - such as intermediary services in respect of insurance or financial services - are exempt.

Make sure that you treat correctly any disbursements you make on behalf of your clients.

Further help with VAT for accountants:

Bookkeeper

See Accountant.

Contract cleaner

Cleaning services, including the materials you use (eg cleaning fluids) and the goods you supply (eg toilet paper) are standard rated.

Special rules apply if you are doing "builders' cleans" in the course of construction.

Further help with VAT for contract cleaners:

Courier service

Courier services supplied within the UK are generally standard rated.

Further help with VAT for courier services:

Graphic designer

Design services are standard rated.

But in some circumstances you may be able to zero rate your services - for example if a client contracted with you to not only design, but also to print, a zero-rated item such as a leaflet. You would subcontract the actual printing to a printer, but then make a single zero-rated charge to your client. Whereas if you charged your client separately for your design services, this would be standard-rated.

Further help with VAT for graphic designers:

IFA

Financial services supplied by intermediaries such as Independent Financial Advisers are normally exempt from VAT, so long as any financial advice is given as part of arranging the client's purchase of a financial product.

However, if you offer financial advice only, or offer services such as workplace personal pension consultancy services to employers, or taxation advice and financial health checks, then these would be standard rated for VAT purposes.

Further help with VAT for IFAs:

Insurance intermediary

Insurance-related services supplied by intermediaries are normally exempt from VAT.

However, depending on the range of activities you carry on, the position can be complex.

Further help with VAT for intermediaries:

Management consultant

Management consultancy services supplied in the UK are standard rated for VAT.

If you provide services to overseas clients - whether they're inside the EU or outside it - then you should be aware that there are 'place of supply' rules for charging VAT on services. These can be complex.

Further help with VAT for management consultants:

Office based

The VAT that applies will depend on your type of business activity. See which businesses on this page most closely match what you do.

Further help with VAT for office based businesses:

Record label

The sale of recorded music is standard rated, whether on physical media like CD or vinyl or in digital format - for example as a download from the internet.

The place of taxation is determined by the location of the customer. This means that all downloads bought by UK customers must have VAT at the standard UK rate added and downloads bought by customers in other EU Member States must have VAT at the appropriate rate added.

(Prior to a law change on 1 January 2015, some large download companies like Apple and Amazon took advantage of a loophole in the EU VAT 'place of supply' laws. The place of taxation was determined by the location of the supplier, meaning that they could base their download operations in an EU country where the VAT rate is low (for example Luxembourg) and only have to add that amount of VAT, rather than the standard UK rate of 20%. This meant that they were able to set the price of their downloads at a low level - typically 99 pence for a single.)

Further help with VAT for record labels:

Sign writer

No information available yet.

Further help with VAT for sign writers:

Staff agency

Unless you are a regulated nurses' agency, nursing auxiliaries' agency or a care assistants' agency (all of whose services can be exempt from VAT under a special concession), all of the services that you are likely to provide are taxable at the standard rate for VAT purposes.

Note that VAT is due on the whole of the amount charged to hirers for supplying temporary labour, not just your margin.

If you just act as an agent or intermediary and you supply workers who are contracted directly by the client, VAT is just due on your fee. (This type of arrangement is generally more applicable to permanent recruitment services.)

Further help with VAT for staff agencies:

Waste collection

Although the collection by local authorities of domestic and commercial (shop and office premises etc) waste is a non-business activity and so not subject to VAT, private businesses that contract with the local authority to provide these services on their behalf are making a standard-rated supply for VAT purposes.

Businesses which contract directly with the customer to collect their waste - whether the customer is a householder or a business, including producers of industrial waste - must also charge VAT at the standard rate where applicable.

Sales of recycled materials are standard rated.

Further help with VAT for waste collection:

Web developer

All of the services that you are likely to offer will be taxable at the standard rate for VAT purposes.

Further help with VAT for web developers:

Architect

Architectural services in the UK are standard rated for VAT.

Further help with VAT for architects:

Builder

Building services can be a mix of standard rate, reduced rate and zero rated work.

Standard rated services include:

  • work on a new building which does not fall into one of the categories qualifying for zero rating
  • repair and maintenance work
  • with some exceptions, work done to an existing building - for example an extension

In some cases, for example the installation of certain energy saving insulation materials, VAT can sometimes be charged at a reduced rate of 5%. This only applies to qualifying energy saving materials, and they must be installed as the main job rather than as part of a larger job to which the standard VAT rate applies. The 5% reduced rate can also apply to certain types of residential conversion work - for example converting a building into a house or flats - and when renovating a house or flat that has been empty for two years.

(Back in the 2016 Budget it was intended to increase the 5% VAT rate to the 20% rate, to comply with EU law. But the government later confirmed that all energy saving materials and installation (including solar panels, wind turbines and water turbines) will continue to be charged at the reduced rate of VAT.)

Reduced rated services can also include certain renovation and conversion work.

Zero rated services can include:

  • work on newly built houses
  • work for a disabled person following special alterations to their home (but only some types of work qualify for zero rating)
  • work on certain other qualifying buildings (for example a village hall), if you are the main contractor (not sub-contracting to another firm which has overall responsibility for the work)

Reverse charge VAT scheme

Since 1 March 2021 a new reverse charge VAT scheme for the construction industry has applied. This is to tackle widespread "Missing Trader" fraud. The reverse charge scheme makes the customer instead of the supplier responsible for accounting for VAT on providing labour. The scheme doesn't apply to the final business or domestic customer but does apply to sub-contractors who supply workers to a main contractor.

Further help with VAT for builders:

Builders merchant

Most of the goods and services you offer are standard rated.

Some, such as certain protective items for industrial use (eg safety boots), are zero rated.

You can also zero rate building materials if you supply them to a disabled person or a charity for their builder to use on zero-rated building work.

Further help with VAT for builders merchants:

Carpet fitter

Carpets and other floor covering materials and services are standard rated for VAT.

The installation of qualifying energy saving insulation materials, including floor insulation, can have a reduced rate of VAT applied to it.

There are a few circumstances where floor covering products and services (not including carpets) can be zero rated for VAT. This can apply when flooring such as linoleum, ceramic tiles or parquet is installed in a building that qualifies for zero rating, for example a newly built house.

From 1 March 2021, the 'Reverse charge VAT scheme' for the construction industry applies to sub-contracting. See Builder.

Further help with VAT for carpet fitters:

Construction based activities

See builder.

Damp proofer

See builder.

Driveways and patios

Driveways and patios can be a mix of standard rate and zero rated work.

Standard rated services include:

  • work on a new building project which does not fall into one of the categories qualifying for zero rating
  • repair and maintenance work on existing exterior surfaces
  • with some exceptions, work done to an existing building - like installing a patio at a house that has not just been built

Zero rated services can include installing paths, patios and driveways for newly built houses, for example.

See builder for a summary of the building trade VAT rules.

Further help with VAT for driveways and patios:

Electrician

The goods and services you provide can be a mix of standard rate, reduced rate and zero rated work.

See builder for a summary of the building trade VAT rules.

If you're charging the reduced rate on energy saving products like solar panels then take care that you do so correctly. Where work such as roof strengthening and modification is agreed by HMRC to be 'ancillary' to the main supply of qualifying goods and materials, the whole job can normally be charged at the reduced VAT rate. However, if the installation is deemed to be ancillary to other standard rated works - or if it is not clearly the main aspect of the works - then the whole job must normally be standard rated. This would apply, for example, where solar panels are installed on a new extension at the time when it is being built and the installation is carried out along with other electrical work. This can be quite a complicated area of VAT, so if you anticipate getting involved with this type of work it would be wise to get clear advice from HMRC. They should also be able to advise you and your clients on a case by case basis if necessary.

Zero rated services can include work on newly built houses, including the supply of certain appliances (for example water or space heaters).

Further help with VAT for electricians:

Fencing contractor

You may undertake a mix of standard rate and zero rated work.

Zero rated services can include, for example, installing walls and fences for newly built houses. Most other types of fencing work are likely to be standard rated for VAT.

Further help with VAT for fencing contractors:

Interior designer

Interior design tends to be standard rated services, such as the retail sale of furnishings, paint, fabrics and so on.

However, if you are acting as the main contractor and billing the client for construction and fitting-out work, some work may be reduced rate and zero rated. See builder.

Further help with VAT for interior designers:

Joiner

See builder.

Painter

See builder for the building trade VAT rules that apply.

Zero rated services can include:

  • work on newly built houses (first decoration only)
  • redecorating work for a disabled person following special alterations to their home (only some types of work qualify for zero rating)

Further help with VAT for painters:

Plasterer

See builder.

Plumber

See builder.

Roofer

See builder.

Scaffolder

Scaffolding, when hired on its own, is always standard rated.

However, there are certain situations where specialist labour-only services that your business might provide - erection, maintenance and dismantling of scaffolding - can be zero rated. For example, the building of new houses and dwellings.

There might also be situations where scaffolders' labour-only services to erect, maintain and dismantle scaffolding may be reduced rated for VAT. For example, where the scaffolding is being used solely for the purpose of providing access to carry out reduced rated work such as installing energy-saving materials like insulation or solar panels.

See builder for the building trade VAT rules that apply to construction.

Further help with VAT for scaffolders:

Shopfitter

Shop-fitting work is generally standard rated.

However, see builder for the building trade VAT rules that apply to construction of all kinds.

Further help with VAT for shopfitters:

Skip hire

Skip hire services are standard rated for VAT. This is the case even if they are supplied in connection with something where goods and services can often be reduced rated or zero rated - for example converting a premises into bedsits or building a new house.

Further help with VAT for skip hire businesses:

Thatcher

VAT is charged at the standard rate on most re-thatching, re-ridging, patching and thatch maintenance work.

Standard rated services include:

  • work on a new building which does not fall into one of the categories qualifying for zero rating
  • repair and maintenance work
  • with some exceptions, work done to an existing building - for example an extension

There is a popular misconception that "most thatching work is zero rated" - this is not the case. Thatching work on newly built houses can be zero-rated and so can work on other qualifying buildings (see builder for the general VAT rules that apply to construction of all kinds). Zero rating should never be assumed - if in doubt always speak to HMRC first.

Further help with VAT for thatchers:

Tiling services

See builder.

Tool hire

The hire of any tools or plant without an operator is standard rated.

However, if plant is supplied with an operator/driver, this may sometimes be zero rated if it is supplied in the course of zero rated construction work - for example new house building. (See builder for the general VAT rules that apply to construction of all kinds.)

If you only deal with trade and business customers then you may well want to show VAT-exclusive prices. However, if you also deal with private customers at the same outlet then the law says you need to show VAT-inclusive prices. This also goes for your website, catalogue and advertisements if they are aimed at private as well as trade customers. As most tool hire shops have at least some private customers, the best policy may be to display both prices clearly.

Further help with VAT for tool hire businesses:

Window fitter

See builder.

Aerial installer

Most of the aerial installation work you do is probably standard rated.

You might do some work that's zero rated too.This could include installing television aerials and satellite dishes on newly built houses for a property developer - including fixed cabling but excluding non-fixed items like digiboxes.

(See builder for the general VAT rules that apply to construction of all kinds.)

Further help with VAT for aerial installers :

Beauty salon

Beauty salon services and retail sales are standard rated for VAT.

However, no VAT is due on any tip that a customer gives at his or her own discretion, to you or your staff.

Further help with VAT for beauty salons:

Boarding kennel

The goods and services supplied by your business are standard rated.

This includes the accommodation for animals and retail sales of items like pet food or grooming products.

Further help with VAT for boarding kennels:

Burglar alarm fitter

The goods and services you provide are standard rated.

Further help with VAT for burglar alarm fitters:

Childminder

The provision of childminding services by registered childminders is exempt from VAT.

Further help with VAT for childminders:

Chimney sweep

The goods and services you provide are standard rated.

Further help with VAT for chimney sweepers:

Clothes hire

Most of the clothes that you hire out are likely to be standard rated.

However, children's clothes and shoes (including fancy dress costumes) are zero rated.

As well as VAT Notice 714 (below), your suppliers should also be able to give you guidance on whether items are standard or zero rated.

Further help with VAT for clothes hire businesses:

Day nursery

See Childminder.

Dressmaker

Made-to-measure items of clothing that you produce for adult customers are standard rated.

Subject to certain conditions, children's clothing is zero rated. If you hire out (or loan) children's items of clothing such as bridesmaids' dresses, this is also zero rated - if the item would be zero rated if it was sold.

However, repairs and alterations to children's clothing are generally standard rated.

Further help with VAT for dressmakers:

Driving School

Driving lessons are standard rated.

If you sell books about learning to drive, these are zero rated (excluding e-books).

Further help with VAT for driving instructors:

Dry cleaner

All of the services that you are likely to offer are standard rated.

Further help with VAT for dry cleaners:

Estate agent

All of the services that you are likely to provide are standard rated.

Any commission that you receive for arranging financial services for clients as an intermediary is normally exempt from VAT - if your business is actually responsible for negotiating the transaction. However, any commission that a professional financial adviser gives you for just referring clients to them is taxable at the standard rate of VAT.

Further help with VAT for estate agents:

Funeral director

The disposal of the remains of the dead (and the making of arrangements for or in connection with the disposal of the remains of the dead) is exempt from VAT.

Furthermore, 'disbursements' (money paid out for goods and services procured on a client's behalf and subsequently reimbursed by the client) are not treated as taxable income for VAT purposes.

If your business engages in activities other than those outlined above (for example, wedding car hire), the liability to VAT of these activities should be established.

Note that the sale of a coffin attracts VAT at the standard rate if it is not done in conjunction with the disposal of a body.

Further help with VAT for funeral directors:

Furniture restorer

Furniture restoration and other similar restoration/conservation services are standard rated.

If you plan to sell antiques yourself, see Antique dealer.

Further help with VAT for furniture restorers:

Garden services

Most garden services are standard rated.

However, soft landscaping supplies (such as turfing, planting trees, shrubs, grass and so on) made on new housing developments can be zero rated.

Further help with VAT for garden services businesses:

Hairdresser

Hairdressing services are standard rated. So too are beauty products.

But no VAT is due on any tip that a customer gives at their own discretion, to you or your staff.

HMRC has tightened up on the VAT treatment of chair rentals - the charge paid to the salon is now nearly always standard rated.

Further help with VAT for hairdressers:

Key cutting

Most of the goods and services you offer will be standard rated.

Further help with VAT for key cutters:

Language school

The supply of English language tuition is exempt for VAT.

So too are supplies of closely related goods and services, provided that they are both for the direct use of the student and necessary for delivering the education to that student. These can include sports, recreational activities, sightseeing and social events.

However, the VAT exemption does not extend to training people to become TEFL teachers.

If you purchase and resell travel, hotel, holiday and certain other services, look into the tour operators' margin scheme (below) to account for VAT.

Further help with VAT for language schools:

Laundrette

The goods and services that you are likely to sell are standard rated.

Service washing can be an exception if the whole of the service charge (but not the actual machine charge) is made and kept by the attendant.

Further help with VAT for laundrettes:

Life coaching

The services you provide are standard rated.

Further help with VAT for life coaches:

Locksmith

The goods and services you provide are standard rated.

Further help with VAT for locksmiths:

Male grooming

Most male grooming salon services and retail sales are standard rated

The reduced rate of VAT applies to sales of contraceptives such as condoms.

No VAT is due on any tip that a customer gives at their own discretion to you or your staff.

HMRC has tightened up on the VAT treatment of chair rentals - the charge paid to the salon is now nearly always standard rated.

Further help with VAT for male grooming salons:

Motorcycle rider training

The goods and services you provide are standard rated.

Further help with VAT for motorcycle riding training:

Pawnbroker

Financial services - such as making loans - are normally exempt from VAT.

However, if you make retail sales, for example of new or second-hand jewellery, these are standard rated. So too is the sale of any gold or other metal to bullion dealers.

If you deal in second-hand items, look into second-hand margin scheme for VAT (see below).

Selling unredeemed pledges that have legally transferred to your ownership (those taken in exchange for a loan of no more than £75, with a statutory six month redemption period) is potentially standard rated. For VAT purposes the purchase price of the item is the amount of the loan plus six months' interest.

If you dispose of unredeemed pledges where the loan:

  • is for more than £75, or
  • is for a term more than six months

the actual person supplying the item to the buyer is not you, but the pledgor - because you do not become the legal owner of the goods. These disposals are outside the scope of VAT unless the pledgor is registered for VAT (for example, where a business has pawned an item). In this case VAT is payable on the sale and it's your responsibility to send this to HMRC, using form VAT 833. You can complete the form online on the Gov.uk website. You do not pay VAT on the amount due to you (the loan capital, interest and selling charges).

Further help with VAT for pawnbrokers:

Personal trainer

Personal trainer services are usually standard rated.

Certain supplies of sport, physical recreation, and physical education services qualify for exemption from VAT (see below).

Further help with VAT for personal trainers:

Pest control

Pest control services are standard rated.

Further help with VAT for pest control businesses:

Pet grooming

The services you offer and the products that you sell are standard rated for VAT purposes.

Further help with VAT for pet grooming salons:

Photographer

The services you offer are standard rated.

Further help with VAT for photographers:

Picture framing

Picture frames, framing services and all of the other goods and services that you are likely to sell are standard rated.

Further help with VAT for picture framers:

Residential letting

The letting of dwellings (including garages and outbuildings) for permanent residential use is normally exempt for VAT purposes.

Exemption also applies to any service charges you might make, for example for the upkeep of common areas in multi-occupied accommodation.

Further help with VAT for residential lettings:

Shoe repairer

Most of your sales are likely to be standard rated.

In some circumstances, repairs to goods (including footwear) which have been specially designed for a disabled person can be zero rated.

Further help with VAT for shoe repairers:

Tanning centre

Tanning sessions and retail sales of tanning and beauty products are standard rated.

Further help with VAT for tanning centres:

Tattoo studio

Tattoo services supplied within the UK are taxable at the standard rate.

Further help with VAT for tattoo studios:

Upholsterer

Upholstery services are taxable at the standard rate.

The exception is qualifying furniture that is sold for the use of a disabled person, which is zero rated.

If you sell a significant amount of secondhand upholstered furniture yourself (for example pieces that you buy on eBay, from auctions or house clearances and 'upcycle'), consider using the secondhand margin scheme (see below).

Further help with VAT for upholstery services:

Window cleaner

Window cleaning and related services are normally standard rated.

Further help with VAT for window cleaners:

Acupuncture practice

Acupuncture and related services are normally standard rated.

Further help with VAT for acupuncture practices:

Aromatherapist

Although the supply of aromatherapy is standard rated, the supply of some other therapies that may be offered can be exempted.

Further help with VAT for aromatherapists:

Care home

The provision of care services is exempt from VAT.

Further help with VAT for care homes:

Chinese herbalist

Chinese herbalists and related services are normally standard rated.

(Although herbs supplied for culinary use - for example herbal teas - are zero rated, this does not apply to herbs supplied for medicinal use (like ginseng), which are standard rated.)

Further help with VAT for Chinese herbalists:

Chiropodist

The professional services of chiropodists/podiatrists registered with the Health and Care Professions Council (HCPC) are exempt from VAT. The exemption also extends to the supply of any medicines, dressings, bandages and so on used in the course of the treatment.

Retail sales of footcare products are standard rated for VAT purposes.

Further help with VAT for chiropodists:

Chiropractor

The provision of chiropractic treatment by a registered chiropractor is exempt from VAT. Any items used in the course of treatment and which the patient is charged for are also exempt from VAT.

Further help with VAT for chiropractors:

Dental lab

The professional services of registered dental technicians and the supply of dental prostheses (dentures, crowns, bridges, and so on) are exempt from VAT. This applies to both NHS and private work.

Supplies of goods such as dental floss, toothbrushes, and denture cleaning powders are standard rated.

Further help with VAT for dental labs:

Dentist

The provision of dental services (and dental appliances such as dentures) by a registered health professional such as a dentist, dental hygienist, dental therapist, dental nurse or dental technician is exempt from VAT.

Purely cosmetic treatments - like tooth whitening - are standard rated, because they don't form part of a healthcare programme. This also includes the retail sale of items such as toothpaste and dental floss.

Further help with VAT for dentists:

Homeopath

Homeopathy services are standard rated.

Further help with VAT for homeopaths:

Nutritional therapist

Nutritional therapy is standard rated.

Further help with VAT for nutritional therapists:

Optician

Opticians provide a mix of goods that are standard rated and services that are exempt from VAT.

So when you dispense spectacles or contact lenses, you are making a standard rated supply of those goods and an exempt supply of the actual dispensing service.

Further help with VAT for opticians:

Osteopath

The provision of osteopathic treatment is exempt from VAT.

Any items that you sell that are separable from the treatment are usually charged at the standard rate.

Further help with VAT for osteopaths:

Pharmacy

The goods and services you provide are usually a complicated mix of standard rate, reduced rate and zero rate.

Many of the goods sold in the pharmacy shop, such as toiletries, cosmetics, photographic goods, and so on, are standard rated. So too are medications which are not supplied on prescription.

Some services, such as the disposal of unwanted medicines, are standard rated.

Goods such as condoms, sanitary protection for women or smoking cessation products are subject to a reduced rate.

Zero rated supplies include the dispensing to a patient by a registered pharmacist of drugs, medicines or other items which have been prescribed by a doctor or dentist, either privately or on the NHS. Also included are qualifying services around the promotion of healthy lifestyles.

Many items of food and drink for human consumption (including some sports and athletics foods and drinks) are also zero rated. So too are books.

Further help with VAT for pharmacies:

Physiotherapist

The provision of physiotherapy treatment is exempt from VAT.

So too are items such as gels, bandages and supports, used in the course of treatment and which the patient is charged for.

Any items that you sell that are separable from the treatment are usually charged at the standard rated. So too is consultancy and medico-legal work (excluding any treatment that arises from the original report).

Further help with VAT for physiotherapists:

Reflexologist

Although reflexology is standard rated, some other therapies (like chiropody) are exempt.

Further help with VAT for reflexologists:

Cafe

Most if not all of what you sell is standard rated, for example:

  • food and drink to be consumed on the premises where it is sold (including any outdoor seating area)
  • hot take-away food and drink
  • alcoholic and soft drinks (take-away)
  • catering food and drink supplied for functions and so on

Tips or gratuities freely given by customers are exempt from VAT.

Supplies of food and drink made in the course of catering are standard rated, but if food is supplied on which the customer has to do further preparatory work before it can be eaten, then this can be zero rated.

Cold food - like sandwiches or pies - is also zero rated if it is sold to be eaten away from the café or restaurant premises.

Further help with VAT for cafes:

Chinese catering

Most of what you sell is standard rated, for example:

  • food and drink to be consumed on the premises where it is sold (including any outdoor seating area)
  • hot take-away food and drink
  • alcoholic and soft drinks
  • tobacco products
  • catering food and drink supplied for functions and so on

Further help with VAT for Chinese catering businesses:

Fish and chip shop

The sale of take-away food is standard rated. So too are sales of soft drinks.

However, no VAT is charged on:

  • gratuities (or 'tips') given at the customer's discretion
  • cold takeaway food such as sandwiches (as long as the whole item is cold - a hot dog, which has a cold bread roll and a hot sausage, is standard rated).

Further help with VAT for fish and chip shops:

Hotel

Most of what you sell is standard rated, for example:

  • sleeping accommodation
  • catering activities (food/drink to be consumed on the premises, including the garden)
  • rooms provided for the purpose of a supply of catering (for example a function room together with catering for a wedding)
  • alcoholic and soft drinks

Tips and gratuities freely given by guests are outside the scope of VAT.

If you have any guests who stay for a continuous period of more than four weeks, then from the 29th day of the stay VAT becomes due only on that part of the charge which does not relate to accommodation.

Food and drink to be consumed on the premises is standard rated, but zero rating can apply to some items. For example, cold sandwiches or rolls sold to people like local office workers to be eaten elsewhere, or provided to guests in packed lunches which are paid for separately and are not supplied as part of an accommodation package.

If you hire out a room and there is no catering supplied with it (for example for a conference), the room hire is exempt.

Machine games on which Machine Games Duty (MGD) is paid (gaming machines which pay cash prizes worth more than the cost of playing) are exempt from VAT - MGD is payable instead.

Further help with VAT for hotels:

Ice cream parlour

If you buy in ready-made ice cream, you charge VAT on it at the standard rate.

Further help with VAT for ice cream parlours:

Indian restaurant

Most or all of what you sell is standard rated, for example:

  • food and drink to be consumed on the premises where it is sold (including any outdoor seating area)
  • hot take-away food and drink
  • take-away alcoholic and soft drinks
  • tobacco products
  • catering food and drink supplied for functions and so on

Further help with VAT for Indian restaurants:

Internet cafe

Most of what you sell is standard rated, for example:

  • charging for internet access and general use of computers (such as burning disks, printing documents and so on)
  • food and drink to be consumed on the premises where it is sold (including any outdoor seating area)
  • hot take-away food and drink
  • alcoholic and soft drinks (take-away)
  • tobacco products
  • confectionery
  • catering food and drink supplied for functions and so on

Cold take-away food (like sandwiches not eaten in your café) is zero rated.

Further help with VAT for internet cafes:

Mobile takeaway

Most if not all of the goods that you are likely to sell will be standard rated.

Further help with VAT for mobile takeaways:

Outside caterer

Food and drinks supplied as part of a contract catering service is standard rated.

Further help with VAT for outside catering businesses:

Pizza delivery

Hot take-away food and drink are always standard rated.

Cold take-away food and drink is zero rated, except where it is of a type which is always standard rated, such as soft drinks, crisps and sweets.

If your prices include delivery then you charge VAT on the whole price if you're VAT registered; if you make a separate charge for delivering the order, there is VAT on it at the standard rate.

Further help with VAT for pizza delivery businesses

Public house

The goods and services you sell are generally standard rated. For example:

  • alcoholic and soft drinks
  • catering activities (food/drink to be consumed on the premises, including the garden)
  • tobacco products
  • crisps and similar snacks
  • takings from games/amusement machines that offer non-cash prizes, or prizes lower than the cost of play

Food and drink to be consumed on the premises are standard rated, but zero rating can apply to some items. For example, cold sandwiches or rolls provided as packed lunches to bed and breakfast customers (if they're not provided in with the accommodation price as part of a package), or sold as takeaways.

Machine games on which Machine Games Duty (MGD) is paid (gaming machines which pay cash prizes worth more than the cost of playing) are exempt from VAT - MGD is payable instead.

Further help with VAT for public houses:

Sandwich bar

You are likely to sell a mixture of standard rated and zero rated items.

Standard rated items include:

  • hot takeaway food and drink
  • all food and drink supplied to be eaten on the premises
  • food and drink - including cold food like sandwiches - supplied for catering
  • items such as snacks, soft drinks, confectionery and so on

Zero rated items include cold takeaway food - including sandwiches.

Further help with VAT for sandwich bars:

Amusement arcade

Machine Games Duty (MGD) has replaced both the old Amusement Machine Licensing Duty (AMLD) and VAT, for most of your machines.

MGD applies to all machines that give a cash prize that's more than the cost of playing the game.

There are two rates of MGD:

  • the standard rate of 20%
  • a lower rate of 5% for machine games with a maximum stake of 10 pence and a maximum cash prize of £8.00

(The higher rate of MGD in force from March 2015 only applies to Category B2 machines that arcades aren't allowed to offer.)

MGD is due on the net takings from relevant machines - this means the gross takings, less the amount paid out as winnings. You pay MGD to HM Revenue & Customs every quarter.

You will then have to account for standard rate VAT on the 'taxable take' of any machines that you don't pay MGD on.

Because most gaming machine takings aren't liable to VAT, your business is probably exempt or partially exempt for VAT purposes. The exception is family entertainment centres where the majority of machines are 'amusement' type rather than gaming machines, and so outside the scope of MGD.

Further help with VAT for amusement arcades:

Caravan site

Standard rated sales include:

  • seasonal touring caravan, motor home and tent pitch fees
  • site owned static caravan holiday lettings
  • commissions earned on holiday booking services for privately owned holiday caravans
  • repairs and maintenance on privately owned caravans
  • off-season storage

The supply of new caravans is:

  • standard rated if the caravan is no more than 7 metres long and 2.55 metres wide
  • reduced rated if the caravan is more than either 7 metres long or 2.55 metres wide and is not manufactured to British Standard 3632:2005
  • zero rated if the caravan is more than either 7 metres long or 2.55 metres wide and is manufactured to British Standard 3632:2005

The rules covering the sale of second-hand caravans are the same as for new caravans unless the caravan is more than 7 metres long or 2.55 metres wide and it was occupied before 6 April 2013 and it is manufactured to BS3632:2005 or an earlier version of that standard. If all these conditions are met, the caravan sale is zero rated.

Zero rating also applies to optional hook-up charges to water and sewerage services for touring caravans and motor homes.

Exempt supplies include:

  • pitch fees at permanent residential caravan parks
  • accommodation in caravans set aside for permanent residential use (ie not holiday accommodation)

Further help with VAT for caravan sites:

Cycling event organiser

You may exempt entry fees from VAT if the total amount of the entry fees that you charge is returned to the entrants in the form of prizes, or if you qualify as an eligible body. According to VAT Notice 701/45 Sport, an eligible body is one meets these four criteria:

  • it is non-profit making
  • its constitution includes a non-distribution clause, or limits its distribution to another non-profit making club or to its members if the club is wound up or dissolved
  • it uses all profits or surpluses to maintain or improve related facilities, or for the purposes of another non-profit making organisation
  • it is not subject to commercial influence

Further help with VAT for cycling events:

Entertainer

If you are self-employed, your sales (earnings, including any royalties) are standard rated.

If you are employed under a standard contract of employment or contract of service, money earned under that contract is outside the scope of VAT.. Examples of performers that may have such a contract are ballet dancers and orchestra players where the contract has enough features to establish an employer/employee relationship.

Further help with VAT for entertainers:

Event hire

The services you provide will be standard rated.

Further help with VAT for event hire businesses:

Fitness centre

Almost all of the services and goods that you sell will be standard rated, but if you sell books these will be zero rated.

Further help with VAT for fitness centres:

Go kart track

The go karting sales you make are standard rated.

Further help with VAT for go kart tracks:

Golf driving range

The core service provided by your driving range will be standard rated.

Further help with VAT for golf driving ranges:

Golf pro

Most of the goods and services you offer will be standard rated, including any commission that you receive on handling green fees.

Any books and magazines you sell are zero rated.

Further help with VAT for golf professionals:

Holiday lettings

Income from holiday lettings is standard rated, although if you let your holiday accommodation out of season this is exempt from VAT, provided that:

  • it is let as residential accommodation for more than 28 days, and
  • the holiday trade in the area is clearly seasonal (for example from Easter until the end of September)

Further help with VAT for holiday letting businesses:

Ice cream van

Most if not all of the goods that you are likely to sell are taxable at the standard rate.

Exceptions might include sandwiches (unless these are served hot or with a hot filling) sold on a take-away basis (not eaten on any part of your premises, if you have any), and milkshakes that contain ice cream which is melted as part of the process. These are zero rated.

Further help with VAT for mobile ice cream vans:

Mobile DJ

As a self-employed DJ, your sales are standard rated.

Further help with VAT for mobile DJs:

Night club

Your sales are standard rated, including:

  • admission charges
  • sales of alcohol and soft drinks
  • catering activities, crisps and snacks
  • tobacco products
  • amusement machine and pool table takings that do not fall within the scope of Machine Games Duty (see Amusement arcade)
  • sales of merchandise such as T shirts

Further help with VAT for night clubs:

Outdoor activity centre

The sales you make are standard rated.

Further help with VAT for outdoor activity centres:

Paintball centre

The sales you make are standard rated, including any catering services you offer.

Further help with VAT for paintball centres:

Pony trekking

Trekking, hacking and riding lessons are standard rated, as are sales of items such as adult riding hats, clothing and footwear.

If you plan to offer stabling and livery services together, this is exempt for VAT purposes provided that you allocate all - or an identifiable part of - the stabling for the sole use of the horse owner. See Livery stables.

If you sell feed separately (for example to local horse owners with their own land and stabling), this is zero rated.

Further help with VAT for pony trekking businesses:

Pool hall

Most of your sales are standard rated, for example:

  • membership fees
  • amounts received for games of snooker, pool, table football and so on
  • retail sales of snooker and pool accessories
  • alcoholic and soft drinks
  • catering activities (food/drink to be consumed on the premises)
  • tobacco products
  • crisps and similar snacks
  • amusement machine takings that do not fall within the scope of Machine Games Duty (see Amusement arcade)

Further help with VAT for pool halls:

Video rental

DVD and games rentals and sales, and sales of items like confectionery, soft drinks and ice cream, are standard rated.

It is unlikely that you will make zero rated sales unless you sell books.

Further help with VAT for video rental businesses:

Blacksmith

The services you provide are standard rated.

Further help with VAT for blacksmiths:

Cheese maker

The supply of most food and drink for human consumption, such as cheese, is zero rated.

Food and drink sold in the course of catering are standard rated. This would include any food and drink served in a café if you operate one.

Products such as cheese boards and cheese knives are also standard rated.

Food packaging the purpose of which is simply to contain, protect and promote the food product is considered to be part of the supply of the food. However, if you supply cheese in containers that are designed to be kept and used after the cheese had been eaten, these containers might be standard rated - unless the value of the packaging is very minor compared with the value of the cheese.

Further help with VAT for cheese makers:

Clothing manufacturer

If you manufacture garments for the adult market, these are standard rated.

Children's clothing is zero rated. You must be able to prove that the items qualify for zero-rating by identifying them as for children on labels, invoices and promotional material.

Further help with VAT for clothing manufacturers:

Factory based

The products supplied by your business are likely to be standard rated.

So long as you meet certain conditions, you can zero rate exports.

Further help with VAT for factory based businesses:

Food manufacturer

Most supplies of food for human consumption are zero rated.

However, some foods are always standard rated, such as ice cream, most confectionery, crisps and some other savoury snacks.

Food packaging whose purpose is simply to contain, protect and promote the food product is considered to be part of the supply of the food it contains and has the same VAT liability. But if you produced food products that were packaged in containers which were designed to be kept and used after the product had been eaten (like a biscuit barrel or an ornamental ceramic bowl), this might need to be treated as a separate standard rated supply - unless the value of the standard rated item is very minor compared with the value of the main zero rated product.

Further help with VAT for food manufacturers:

Furniture maker

Furniture and furnishings are standard rated.

Further help with VAT for furniture makers:

Ice cream manufacturer

Ice cream products are standard rated. This includes:

  • ice cream
  • ice lollies
  • water ices or sorbets
  • frozen yoghurt that is like ice cream

If you supply biscuit-type items like wafers and cones, these can be either standard rated or zero rated:

  • if they are supplied separately from the ice cream, then they are zero rated - unless they are coated with chocolate. If they are, then they are standard rated as confectionery
  • if they are supplied as part of an ice cream - for example a filled cone - then they are standard rated, like the ice cream itself

Further help with VAT for ice cream manufacturers:

Jewellery maker

Jewellery is standard rated.

Further help with VAT for jewellery makers:

Pottery

Pottery is standard rated.

Further help with VAT for potters:

Printer

Printing services are standard rated and zero rated.

Standard rated items include:

  • business stationery such as letterheads, business cards, compliments slips and invoices
  • labels
  • calendars, score cards, membership cards
  • order books and forms
  • lottery tickets and cards
  • posters
  • unprinted paper

Zero rated items include:

  • advertising leaflets
  • journals
  • manuals
  • books and booklets
  • brochures
  • catalogues
  • circulars and pamphlets
  • newspapers and periodicals

You can also zero rate any pre-press or finishing work that you carry out on a zero rated item.

Further help with VAT for printing businesses:

Rural crafts

Rural crafts are standard rated.

Further help with VAT for rural craft businesses:

Antique dealer

Antiques and similar items are standard rated.

However, because many items in the antique trade are bought from, or sold to, private individuals who are not registered for VAT, dealers are allowed to us The VAT Margin Scheme. VAT is due on the difference between what you pay for the goods and what you sell the goods for, instead of on the full value of the goods sold. This difference is referred to as the margin and it includes the VAT due.

For example, if you buy an item for £500 and sell it for £750 the margin is £250 (figures included for illustrative purposes only). To work out the VAT due, multiply the margin by the current VAT fraction. The VAT fraction is 1/6.

£250 x 1/6 = £41.67 VAT due

To use this scheme you must comply with certain conditions, which are set out in VAT Notice 718, below.

Further help with VAT for antique dealers:

Architectural salvage

See Antique dealer.

Art gallery

Most of the goods and services you offer will be standard rated, but books are zero rated.

If the artist is VAT registered, VAT must normally be added to the selling price of their work whether your gallery is VAT registered or not. The artist is required to account for the VAT.

If your gallery is VAT registered and acts as an 'undisclosed agent', you add VAT to the commission fees you charge to artists when you sell their work, and account for this VAT.

But artists who are not VAT registered can avoid the need to charge VAT on their work even if your gallery is VAT registered. They do this by contracting with you acting as a 'disclosed agent' and invoicing the customer themselves.

If you deal in antique and pre-owned pieces of art, consider The VAT Margin Scheme (see Antique dealer).

Further help with VAT for art galleries:

Art shop

Most of the goods and services you offer will be standard rated, but books are zero rated.

Further help with VAT for art shops:

Bakery

Bread is zero rated.

Other food that you may sell may be standard rated. See Cafe.

Further help with VAT for bakers:

Bicycle shop

Most of the things that you sell are likely to be standard rated.

You may also sell some things that are zero rated, for example:

  • pedal cycle helmets, provided they carry an EC 'CE' mark
  • some children's clothes, shoes and clothing accessories
  • books
  • some types of sports food and drink products

Further help with VAT for bicycle shops:

Book shop

Books, booklets, journals, newspapers and periodicals (but not e-books and e-readers) are zero rated.

Standard rated items include:

  • stationery
  • greetings cards
  • DVDs
  • recorded music
  • toys and gifts
  • e-books and e-readers

Further help with VAT for book shops:

Bridal shop

Most of the goods and services you offer are standard rated.

Subject to certain conditions, children's clothing (such as bridesmaids' dresses) and children's footwear are zero rated.

Further help with VAT for bridal shops:

Butcher

Meat and meat products are zero rated.

However, supplies of food and drink made in the course of catering are standard rated.

So too are hot food and drink to take away. For example, pasties, sausage rolls that are headed up for people to buy at lunchtime.

(Freshly cooked food that is eaten cold is zero rated, even if it is still warm when sold.)

Further help with VAT for butchers:

Convenience store

Many of the product ranges you sell are standard rated. For example:

  • snacks, soft drinks, confectionery
  • ice creams and lollies
  • alcoholic drinks
  • tobacco products
  • greetings cards and stationery
  • hot take-away food

A few things, like contraceptive products, qualify for a reduced rate.

Zero rated items include:

  • many items of food and drink for human consumption
  • cold take-away food and sandwiches
  • newspapers, books and magazines

Your suppliers should be able to give you guidance.

Further help with VAT for convenience stores:

Carpet shop

The goods and services you provide are standard rated.

Further help with VAT for carpet shops:

Clothes shop

Adult clothing, hats and accessories are generally standard rated.

If you sell children's clothes, hats and clothing accessories such as belts, these are zero rated.

Further help with VAT for clothes shops:

Computer shop

The goods and services you provide are standard rated.

If you deal lin second-hand computers, consider the VAT Margin Scheme.

Further help with VAT for computer shops:

Delicatessen

Most of what you sell is zero rated.

Some of the items you may sell are standard rated. For example:

  • soft drinks
  • confectionery
  • ice cream
  • alcoholic drinks
  • hot take-away food

Cold take-away food such as sandwiches (including food that has been cooked first, such as quiche) is zero rated.

Supplies of food and drink made in the course of catering are standard rated - for example, if you serve meals or snacks in a café area, or supply catering services at functions.

Further help with VAT for delicatessens:

DIY shop

Most of the goods and services you offer will be standard rated.

Books and magazines are zero rated.

You might also sell reduced rate logs, kindling, coal or charcoal.

Further help with VAT for DIY shops:

E-Business

Because you may be making sales of goods or services to customers all over the world, determining the VAT treatment of your goods or services can be complex. The treatment of online transactions is affected by the nature of the goods/services supplied and their place of supply.

In most cases - for example if you're selling physical products within the EU - the place of taxation is determined by the location of the supplier, not the customer. So if your business is in the UK and you are selling to non-business customers in another EU Member State, you would charge VAT at the UK rate. (Sales to customers outside the EU can be zero-rated.)

In contrast, the place of taxation for the sale of digital services is the location of the customer. So all digital products and services bought by UK customers have the UK VAT rate, while those bought by customers in other EU Member States have VAT at the rate appropriate to the customer's location.

Further help with VAT for e-businesses:

eBay trader

The VAT rate will depend on the type of goods and services you are selling.

Check the list of businesses at the top of this page. Which one(s) most closely matches what you sell?

Further help with VAT for eBay traders:

Electrical shop

The goods and services that you provide are standard rated.

Further help with VAT for electrical shops:

Fishing tackle retailer

Most of the goods and services you sell are standard rated, but books are zero rated.

If you deal in secondhand fishing tackle, consider the secondhand Margin Scheme.

Further help with VAT for fishing tackle shops:

Fishmonger

The fish you sell in the shop is zero rated.

Any supplies of food and drink made in the course of catering are standard rated. So too is hot food and drink to take-away.

Further help with VAT for fishmongers:

Florist

The sale of flowers is standard rated.

Books and magazines are zero rated.

Further help with VAT for florists:

Furniture shop

The goods and services you provide are standard rated.

Further help with VAT for furniture shops:

Garden centre

Most of what you sell is standard rated.

This includes ornamental plants.

However, plants (including their seeds) for human consumption are zero rated.

Cold take-away food such as sandwiches (including food that has been cooked first, such as quiche) is zero rated.

Common exceptions include soft drinks, confectionery, ice cream and hot take-away food, which are standard rated.

Supplies of food and drink made in the course of catering are also standard rated - for example, if you serve meals or snacks in a café area.

You might also sell reduced rate logs, kindling, coal or charcoal.

Further help with VAT for garden centres:

Greengrocer

Most food that you sell is zero rated.

The common exception is convenience lines, for example crisps, soft drinks and confectionery, and most non-food items. These are standard rated.

Cut flowers and ornamental plants are also standard rated.

Further help with VAT for greengrocers:

Hair products

Hair and beauty products are standard rated.

Further help with VAT for hair product businesses:

Health shop

Health food is zero rated,

However, supplies of food and drink made in the course of catering are standard rated - for example food and drink served in a café, if you have one, or hot food and drink to take-away.

Other items that you might sell, such as cosmetics, vitamins, toiletries or crafts, are also standard rated.

Books and magazines are zero rated.

Services provided by registered health professionals are in many cases exempt from VAT.

Further help with VAT for health shops:

Jeweller

The goods and services you provide are standard rated.

Further help with VAT for jewellers:

Lingerie shop

Most lingerie items are standard rated

Certain specialist clothing - like mastectomy bras and swimwear - for the personal use of your customers, are zero rated.

Further help with VAT for lingerie shops:

Market stall

The VAT rate will depend on the type of goods and services you are selling.

Check the list of businesses at the top of this page. Which one(s) most closely matches what you sell?

Further help with VAT for market stalls:

Milk round

Milk and other dairy products are zero rated. So too are groceries such as eggs, potatoes, orange juice and bread.

You may also sell some standard rated items, such as:

  • snacks
  • soft drinks
  • confectionery
  • pet foods

Further help with VAT for milk round businesses:

Mobile phones

Most of the goods and services you offer are standard rated.

Any magazines are zero rated.

If you deal in a significant amount of second-hand phones and equipment consider the Margin Scheme.

Be aware of 'missing trader' VAT fraud. Typically, this would involve a company offering to sell you phones at a discounted price and then another company approaching you offering to buy the same type of goods shortly afterwards. The first company charges you VAT, but then disappears and fails pay the VAT to the tax authorities. You could find yourself the only business that HMRC can trace; if they can show that you ought to have realised that fraud was being committed, they can collect all the outstanding VAT from you. Generally it is best to work on the principle that if a deal looks too good to be true, it probably is.

Further help with VAT for mobile phone shops:

Music shop

Most of the sales you make are standard rated.

In the case of a sale of a customer's instrument, the VAT applies only to the commission earned on the sale.

Books (but not e-books), magazines and printed sheet music are zero rated.

If you deal in second-hand instruments, consider the Margin Scheme.

Further help with VAT for music shops:

Needlecrafts shop

The goods and services you sell are generally standard rated.

Books, magazines and babies' and children's clothing are zero rated.

Delivery charges (for online or mail-order sales) have the same VAT rate as the goods you are supplying.

Further help with VAT for needlecraft shops:

Newsagent

Many of the products you sell are standard rated, for example:

  • snacks
  • soft drinks, alcoholic drinks
  • ice cream and lollies
  • tobacco products
  • greetings cards and stationery
  • toys and gifts
  • CDs and DVDs

Other product ranges are zero rated, for example:

  • many items of food and drink
  • newspapers, magazines and books
  • cold take-away food and sandwiches

Exempt supplies include commission on sales of Lottery tickets and postage stamps.

Fuel for domestic use (for example, bags of kindling or charcoal) are subject to a reduced rate.

Further help with VAT for newsagents:

Off licence

Alcoholic drinks are standard rated. So too are:

  • soft drinks
  • tobacco products
  • snacks, confectionery

For other products, see Convenience store.

In England and Wales, it is against the law to sell alcoholic drink for less than the value of the excise duty plus VAT.

Further help with VAT for off licences:

Office goods supplier

Most of the goods and services you offer are standard rated, but books are zero rated.

Delivery charges (for local deliveries and for online or mail-order sales) are subject to the same VAT rate as the goods you are supplying.

Further help with VAT for office goods suppliers:

Outdoor equipment shop

Most of the goods and services you offer are standard rated, but books are zero rated.

(Sports nutrition drinks are standard rated. Back in 2012 they used to be zero-rated.)

If you deal in a significant amount of second-hand equipment, consider the Margin Scheme.

Further help with VAT for outdoor equipment shops:

Pet shop

Most or all of the items that you will sell, including pet food and pets themselves, are likely to be standard rated.

Books (but not e-books) are zero rated.

You can also zero rate dog food if it is specially prepared for working dogs like sheep dogs, gun dogs or for racing greyhounds (but not pets) - but not if it is in biscuit or meal form. Canned, packaged or prepared pet food is always standard rated.

Wild bird food that you sell loose - for example that you measure out into a paper or plastic bag - is zero rated. But if it is packaged for retail sale it is standard rated. This includes things like nets of peanuts or similar bird food that you can hang from a tree.

Further help with VAT for pet shops:

Photo equipment

Most of the goods and services you sell are standard rated.

Books (including photobooks) are zero rated.

If you deal in a significant amount of secondhand photographic equipment, consider the Margin Scheme. This allows you to calculate how much VAT is due by reference to the difference between what you pay for the goods and what you sell them for (your 'margin'), instead of on the full retail value of the goods. The margin includes the VAT due.

Further help with VAT for photo equipment retailers:

Post office

Main and Local post offices

Under the contracts that apply to sub-postmasters running Main and Local post offices, if you are VAT registered, VAT at the applicable rate will be added to the Post Office transaction fees you receive. Post Office Ltd (POL) will issue you with a self-billed VAT invoice showing the output tax due.

Community branch post offices

The supply of services to the Post Office by sub-postmasters operating Community post offices is outside the scope of VAT. This applies also to sub-postmasters who have not yet had to change to the new model under the Network Transformation programme. However, if you operate a retail business alongside the Post Office business, you will have to register for VAT if your taxable sales are likely to be above the current VAT threshold.

You are likely to sell a mixture of standard rated, reduced rated and zero rated items. See Convenience store.

Further help with VAT for post offices:

Record shop

Most of the items that you sell, including records, are standard rated.

You may also sell items that are zero rated, such as books, magazines and children's T-shirts.

If you plan to deal in a significant amount of secondhand records you might want to use the Margin Scheme. This allows you to calculate how much VAT is due by reference to the difference between what you pay for the goods and what you sell them for (your 'margin') instead of on the full retail value of the goods. The margin includes the VAT due.

Further help with VAT for record shops:

Retail based

The VAT that applies will depend on what you sell. See which businesses on this page most closely match yours.

Further help with VAT for retail based businesses:

Scrap metal dealer

The goods and services you provide are standard rated.

Further help with VAT for scrap metal dealers:

Shoe shop

Most of the things that you sell (such as footwear for adults, accessories, shoe care products and so on) are standard rated.

Children's shoes are zero rated.

Further help with VAT for shoe shops:

Sports shop

Most of the things that you sell are likely to be standard rated.

Zero rated items which you might sell include:

  • pedal cycle helmets, provided they carry a 'CE' mark
  • some children's clothes and shoes
  • books and magazines

Delivery charges (for online or mail-order sales) have the same VAT rate as the goods you're supplying - either standard or zero-rated.

Further help with VAT for sports shops:

Surf shop

Most of the goods and services you sell are standard rated.

Books and children's shoes and clothing are zero rated.

If you deal in secondhand surfing equipment, consider the Margin Scheme. This allows you to calculate how much VAT is due by reference to the difference between what you pay for the goods and what you sell them for (your 'margin') instead of on the full retail value of the goods. The margin includes the VAT due.

Further help with VAT for surf shops:

Tack shop

Most of the goods and services you sell are standard rated.

Children's clothing and footwear, most animal feedstuffs and books are zero rated.

Further help with VAT for tack shops:

Toy shop

Most of the things that you sell are standard rated.

Books, children's clothes, shoes and accessories like hats and belts are zero rated.

Further help with VAT for toy shops:

Wholesale

The VAT that applies will depend on what you sell. See which businesses on this page most closely match your products.

Further help with VAT for wholesale businesses:

Coach firm

Domestic passenger transport in the UK in a vehicle designed or adapted to carry ten or more passengers (including the driver) is zero rated.

If you supply either a coach or a driver on their own, this is standard rated, as are taxi and hire car services.

If you receive commissions on arranging travel insurance this is exempt (subject to certain conditions).

Further help with VAT for coach firms:

Haulier

Haulage services supplied within the UK are generally standard rated.

Further help with VAT for hauliers:

Limousine hire

Your hire charges are standard rated.

Any tips that are voluntarily given by your passengers are outside the scope of VAT.

Further help with VAT for limousine hire businesses:

Minicab

If you plan to operate as a licensed driver only, or as an owner driver obtaining work from a radio operator or through a smartphone app service, it is likely that your income will not exceed the current VAT threshold. However you may have decided to set up a more sizeable operation and in this case you will have to register for VAT if your taxable income is likely to be above the threshold.

Further help with VAT for minicab businesses:

Removals

Removals services supplied within the UK are generally taxable at the standard rate for VAT purposes.

Further help with VAT for removals businesses:

Taxi firm

Taxi hire charges are standard rated.

Further help with VAT for taxi firms:

Stay up-to-date with business advice and news

Sign up to this lively and colourful newsletter for new and more established small businesses.