There are three rates of VAT. The rate to be charged by the business is predetermined based on the item that is being sold or the service being offered. The rates are:
- Standard rate at 20% – this applies to the majority of goods and services
- Reduced rate at 5% – gas and electricity used in the home for example
- Zero rate at 0% – includes books and newspapers, children’s clothing, public transport and food (excluding meals-in and takeaways).