Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

VAT definition

What does VAT mean? VAT is a consumption tax on most supplies of goods and services made by taxable businesses to businesses or consumers. In practice, it underpins pricing (plus VAT), invoicing, cross‑border trade and many property transactions. The charge and key concepts are set out in the UK Value Added Tax Act 1994 and, in Ireland, the Value‑Added Tax Consolidation Act 2010 (implementing the EU VAT Directive). In Northern Ireland, EU VAT rules continue to apply to goods under the Windsor Framework; services follow UK rules. Core features include: output tax charged at standard, reduced or zero rates; exempt supplies (for example, certain...

UK VAT: Zero-Rated and Reduced-Rate Supplies—Categories, Exceptions, Anti-Avoidance and Practical Examples

Published by a LexisNexis Tax expert

Practice notes

Under the UK’s vat regime, taxable supplies can be subject to the standard rate, a reduced rate, or be zero-rated. This Practice Note sets out the principal categories of zero-rated and reduced-rate supplies, and offers further detail on five commonly encountered zero-rated areas in practice:

food
books and printed materials
construction of buildings, plus some sales and leases by property developers
drugs, medicines and appliances
clothing and footwear

Zero-rated supplies

A zero-rated supply is still treated as a taxable supply even though no VAT is charged on it, making it different from an exempt supply. This leads to two key consequences:

zero-rated supplies count when assessing whether a business must (or is entitled to) register for VAT; see Practice Note: Who must and who can register for VAT in the UK?
input tax attributable to a zero-rated supply can be recovered from HMRC (whereas input tax on an exempt supply is not recoverable); see Practice Note: When can a person recover VAT?...

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Web page updated on 22/05/2026

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