UK VAT rates exist at three levels and depending on the type of supply which is made; the appropriate band of Valued Added Tax should be applied to that sale.
VAT Standard Rate
The VAT standard rate of tax is 17.5 percent and is by far the most common fraction used in the calculation of the charge.
The rate applies to the sale of most goods and services in the UK.
VAT Reduced Rate
The reduced rate is currently 5 percent and is levied on utility services such as gas and electricity.
VAT Zero Rate
The zero rate for Valued Added Tax often causes some confusion amongst preparers of returns. The reason for this is that the zero rate is interpreted as the same as not being applicable to VAT at all.
Although multiplying a net amount by zero is mathematically the same as not performing any calculation altogether, there is a significant difference with regards to submitting a VAT return.
Zero rated items are included in the submission figures whereas items which are exempt are excluded.
