United Kingdom

The basics

Value Added Tax in the United Kingdom operates under a tiered system. The headline rate sits at 20%, covering most standard goods and services — from restaurant meals and clothing to pay TV subscriptions and admission to sporting events. A reduced rate of 5% applies to a narrower category of products, including children’s car seats, mobility aids for elderly people, heating equipment, and smoking cessation aids like nicotine patches.

A third tier — the zero rate — means no VAT is charged at all, though the goods still technically fall within the VAT system. This covers essentials such as most foodstuffs, pharmaceuticals, medical equipment, books, newspapers, and children’s clothing.

Since Brexit took effect on 1 January 2021, the UK sets its VAT rules entirely independently, no longer bound by EU directives.

Who needs to register

The £90,000 turnover threshold that most guides quote applies only to businesses established in the UK. If your business has no UK establishment, HMRC treats it as a non-established taxable person (NETP), and for an NETP there is no threshold at all: registration is required as soon as you make a taxable supply in the UK, whatever its value, and HMRC must be notified within 30 days of that supply.

This is the same rule for EU and non-EU sellers alike. The distance selling regime that once let EU businesses sell to UK consumers up to £70,000 under their own VAT number ended with Brexit on 1 January 2021, and nothing replaced it for Great Britain.

Storing inventory in a UK fulfilment centre or warehouse puts you in the same position, regardless of where the business is established: goods held in the UK are supplied in the UK, so registration is required from the outset.

Selling through an online marketplace changes who remits the VAT, not whether you are inside the system. The marketplace accounts for the tax on consignments of £135 or less sent from outside the UK, and on sales of goods already in the UK belonging to a seller with no UK establishment. In that second case your supply to the marketplace is a zero-rated deemed supply — reportable, and the reason registration usually remains necessary even though the marketplace pays the tax.

Northern Ireland is the one place where the old threshold survives. Under its continuing arrangements with the EU for goods (though not services), an EU business distance selling to Northern Ireland consumers can keep charging VAT at its own domestic rate until those sales exceed £70,000 in a calendar year, and must register for UK VAT within 30 days of crossing that line. The figure has no application to Great Britain.

Registration can be completed online or by post through HMRC, with a VAT number and certificate typically issued within 30 days. Unlike many other jurisdictions, the UK does not generally require EU or non-EU businesses to appoint a local fiscal representative.

Filing, deadlines and penalties

VAT returns are submitted either monthly or quarterly, with quarterly filing being the norm for most businesses. The submission deadline falls one calendar month and seven days after the end of each accounting period.

Businesses with an annual VAT liability exceeding £2.3 million face additional obligations, with payments required on the last day of the second and third months within each VAT quarter.

Penalties work on a points-based system for late submissions. Each missed deadline earns a penalty point, and once the threshold for the relevant filing frequency is reached, a £200 fine is issued — with a further £200 added for every subsequent late filing.

Late payments carry their own charges, and they were increased from 6 April 2025. A first penalty of 3% of the outstanding tax applies once payment is 15 days late, with a further 3% if the debt is still unpaid at day 30. From day 31 a second penalty accrues daily at an annualised rate of 10% for as long as the balance is outstanding.

Intrastat and reverse charge

Intrastat no longer applies to Great Britain. The requirement ended on 1 January 2022, HMRC having taken the trade data it needs from the customs declarations that imports already generate — so a business moving goods between Great Britain and the EU files no Intrastat declarations in either direction.

The obligation survives only for goods moving between Northern Ireland and the EU, where the thresholds are £500,000 for arrivals and £250,000 for dispatches.

The reverse charge mechanism shifts VAT accounting responsibility from supplier to customer for certain cross-border transactions. When a UK VAT-registered business purchases services from an overseas supplier, it is the buyer — not the seller — who must account for and report the VAT on their return.