Great Britain VAT Rates and Taxability Reference
Look up Great Britain VAT rates, the 20% standard, 5% reduced, and zero rate, and how Kintsugi treats SaaS, discounts, shipping, and price display.Updated 4 days ago
/ /
Statutory VAT Rates
Field | Value |
|---|---|
Standard rate | 20% |
Reduced rate | 5%, applied to specified goods and services including domestic fuel and power, and certain energy-saving materials |
Zero rate | 0%, applied to specified goods and services including most food, books, children's clothing, and exports of goods, with input VAT recovery available |
Exempt supplies | Specified supplies including insurance, certain finance, and certain health and education services, with no input VAT recovery |
Special-rate regions | None. The same rates apply across the whole United Kingdom |
Currency | Pounds sterling (GBP) |
Conversion rate for other currencies | HMRC accepts the published monthly rate, the spot rate on the date of supply, or an agreed alternative applied consistently |
The difference between zero-rated and exempt matters to your figures. Both mean you charge no VAT to the customer. Zero-rated sales count toward your registration threshold and let you recover input VAT. Exempt sales do neither.
If you make both taxable and exempt sales, Kintsugi further limits how much input VAT you can recover overall, in proportion to that mix. This limit is known as the pro rata coefficient: the VAT you can claim back is reduced by the ratio of your non-exempt sales to your total sales. Kintsugi calculates that ratio from your own sales data rather than asking you to enter it. It sets a provisional ratio for the year from your prior-year sales, or 100% if you have no prior-year sales, applies it consistently across the filing periods in that year, and corrects it once your actual full-year sales are known. Businesses with no exempt sales are unaffected.
Supported Product Categories
Kintsugi calculates Great Britain VAT for the B2B SaaS and B2C SaaS categories. Treatment depends on where you are established and whether you are registered.
Field | Value |
|---|---|
B2C SaaS, seller registered in Great Britain | 20% |
B2C SaaS, non-established seller with a Great Britain registration | 20% |
B2C SaaS, non-established seller with no Great Britain registration | No VAT charged, because you cannot charge VAT before your registration takes effect. Consumers cannot self-assess, which is why the £0 threshold matters |
B2B SaaS, non-established seller selling to a VAT-registered UK business | 0%. Your business customer accounts for the VAT itself under the reverse charge, whether or not you are registered |
B2B SaaS, seller established in Great Britain selling to a UK business | Domestic business-to-business supplies are standard-rated. Confirm your position with us, because Kintsugi's Great Britain rules are configured for the non-established seller case |
Sales to consumers outside the UK | No UK VAT. The supply may be taxable where your customer is |
Sales made through a third-party marketplace or platform | The platform accounts for the VAT on the supply, not you |
Categories other than B2B SaaS and B2C SaaS | Not supported. Kintsugi does not calculate Great Britain VAT for these |
Digital services supplied by an overseas business to UK customers are liable to UK VAT on consumer supplies. That is the single most useful sentence in this table: as a non-established seller, your consumer sales drive your UK VAT, and your business sales usually do not.
Discounts and Adjustments
VAT is charged on what you actually receive, so a discount reduces the VAT rather than creating a separate supply. What matters is whether the discount lands on the original invoice or after it.
Field | Value |
|---|---|
Discount shown on the original invoice | VAT is calculated on the discounted amount |
Discount given after the invoice, including prompt-payment discounts | Issue a credit note referencing the original invoice. The VAT adjustment lands in the period the credit note is issued |
Vouchers and gift cards | A single-purpose voucher is taxed when sold. A multi-purpose voucher is taxed when redeemed |
Loyalty points redeemed as payment | VAT is calculated on the cash portion only. Issuing points is not a taxable event |
Manufacturer rebate paid to the buyer | Does not reduce the retailer's VAT base. The retailer charges VAT on the full sale price |
Refunds and cancellations | Handled by credit note, and deducted from your threshold figure at the credit note date |
Bad debt relief | Available on VAT already accounted for on an unpaid invoice, subject to HMRC conditions. Kintsugi does not calculate bad debt relief |
Shipping, Ancillary Charges, and Rounding
Field | Value |
|---|---|
Shipping, insurance, or gift wrap supplied with the goods | Taxed at the rate of the underlying goods or services |
Shipping supplied separately | 20% |
Shipment containing items at different rates | Apportion the delivery charge across the items by value, unless one item is clearly the principal supply |
Rounding direction | HMRC permits rounding down to the nearest whole penny on a total VAT figure, or arithmetical rounding applied consistently at line level |
Rounding granularity | Whole pence |
Price Display
Field | Value |
|---|---|
Consumer prices | Shown VAT-inclusive |
Business invoices | Shown VAT-exclusive, with the VAT amount stated separately |
Reverse charge invoices | Show no VAT amount, and state that the customer is liable to account for the VAT |
Why it matters | Your business customer needs the VAT stated separately to recover it, and a reverse charge invoice needs the wording to explain why no VAT is shown |
Import Thresholds for Goods
Field | Value |
|---|---|
Commercial de minimis | None. Low value consignment relief was withdrawn, so every commercial consignment is taxable |
Consignments of £135 or less | VAT is due at the point of sale rather than at the border, and the seller or the marketplace accounts for it |
Consignments above £135 | Import VAT and customs duty are due at the border, on the customs value including shipping and insurance |
Postponed VAT accounting | Available to UK VAT-registered importers, allowing import VAT to be accounted for on the return rather than paid at the border. Kintsugi handles this: upload the purchase with a VAT paid amount of 0, and Kintsugi accounts for the import VAT and recovers the recoverable portion on the same return |
Kintsugi's role | Kintsugi does not calculate or file for goods sold into Great Britain. Import VAT you paid at the border is separate from input VAT and is not calculated. Import VAT under postponed VAT accounting is the exception, because it is accounted for on your return rather than at the border |
What Is Not Included Here
Product categories beyond B2B SaaS and B2C SaaS. Kintsugi does not calculate Great Britain VAT for other categories, so no rate is published for them here.
The full HMRC rate schedule. The reduced-rated, zero-rated, and exempt lists are long and item-specific. This page gives the rates and the representative examples, not the complete schedule. HMRC publishes the full lists at gov.uk.
Input VAT recoverability percentages. Kintsugi calculates how much of the VAT on your uploaded purchases you can recover. Recoverability is held per combination of product category and country, can be anywhere from 0% to 100%, and is treated as fully recoverable where no percentage has been set. It is not a separate VAT rate, so no percentages are published here, and it is maintained by Kintsugi rather than set by you. For how recovered input VAT reaches your return, see Great Britain VAT Filing and Payment Reference.
VAT special schemes. Flat Rate, Cash Accounting, Annual Accounting, and the retail schemes change how VAT is calculated. Kintsugi calculates on standard VAT accounting.
Northern Ireland goods rules. Not yet in scope.
Penalties and interest. Kintsugi does not calculate HMRC late-registration, late-filing, or late-payment charges.
When you must register. See Understanding Great Britain VAT Registration Triggers and Thresholds.
This article is general information about how Kintsugi works, not tax advice for your specific situation.
Need Help?
For further concerns, we're always here to help. If you can't find the answer you're looking for, reach out to us using the chat in the bottom right corner of your screen.
Was this article helpful?