# VAT

url: https://whereyourmoneygoes.co.uk/vat/
updated: 29 September 2026
licence: Our words, analysis, charts and derived calculations: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/), credit [Tekstak Ltd](https://tek-stak.co.uk). Figures: each source's own licence, listed under Sources.
publisher: [Tekstak Ltd](https://tek-stak.co.uk)

# VAT



Last updated 29 September 2026.
Figures refresh every night. [How each figure is worked out](/methodology/).





**A tax on most spending, charged at 20% on the standard rate, collected by businesses at every stage and ultimately paid by whoever buys the finished thing.** Everyone who buys anything standard-rated. Businesses collect it and reclaim what they paid on their own purchases, so the tax lands on the final consumer. It raised **£179.9bn** in 2025–26, which is 19.2% of everything HMRC collects and 5.86% of the economy. That is up £8.9bn (5.2%) on the year before.



Figures for the 2025–26 financial year. Source:
[HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk).





## Key figures



- £179.9bnRaised in 2025–26

▲
- 19.2%Of everything HMRC collects

▼
2025–26
- 5.86%Of the whole economy (GDP)

▲
2025–26
- -5.9%In real terms, against the 2021–22 peak

Adjusted for inflation with the GDP deflator
As of 6 April 2025
- 20%Standard rate

Unchanged since 4 January 2011




Sources: [HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk), [HM Treasury](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp).





## What is the short version?



- **How big:** £179.9bn in 2025–26, 19.2% of everything HMRC collects; after inflation, 13% more than in 2015–16.
- **A £60 pair of shoes:** VAT at 20% is always exactly one sixth of the price you pay, never one fifth. That is the most common arithmetic mistake about it.
- **Latest change, 2025:** Private school fees become standard-rated at 20%, having previously been exempt as education.
- **Where it goes:** Nowhere in particular, like almost every tax: it is not earmarked.
- **The argument:** Very hard to avoid, because the chain of reclaims creates a paper trail; against that, measured against income rather than spending, it takes a larger share from poorer households.






## How much does it raise?




**VAT receipts, cash and real terms**










**The numbers behind this chart**





| Financial year | Cash | Real, 2025-26 prices |
| --- | --- | --- |
| 2006–07Details | £77,360m | £126,630m |
| Real, 2025-26 prices£126,630m | | |
| 2007–08Details | £80,599m | £129,401m |
| Real, 2025-26 prices£129,401m | | |
| 2008–09Details | £78,439m | £121,408m |
| Real, 2025-26 prices£121,408m | | |
| 2009–10Details | £70,160m | £107,207m |
| Real, 2025-26 prices£107,207m | | |
| 2010–11Details | £83,502m | £125,459m |
| Real, 2025-26 prices£125,459m | | |
| 2011–12Details | £98,292m | £144,594m |
| Real, 2025-26 prices£144,594m | | |
| 2012–13Details | £100,572m | £145,427m |
| Real, 2025-26 prices£145,427m | | |
| 2013–14Details | £104,718m | £148,336m |
| Real, 2025-26 prices£148,336m | | |
| 2014–15Details | £111,363m | £155,550m |
| Real, 2025-26 prices£155,550m | | |
| 2015–16Details | £114,941m | £159,441m |
| Real, 2025-26 prices£159,441m | | |
| 2016–17Details | £119,799m | £162,914m |
| Real, 2025-26 prices£162,914m | | |
| 2017–18Details | £126,423m | £169,772m |
| Real, 2025-26 prices£169,772m | | |
| 2018–19Details | £132,540m | £174,020m |
| Real, 2025-26 prices£174,020m | | |
| 2019–20Details | £129,885m | £166,150m |
| Real, 2025-26 prices£166,150m | | |
| 2020–21Details | £101,650m | £123,573m |
| Real, 2025-26 prices£123,573m | | |
| 2021–22Details | £157,546m | £191,068m |
| Real, 2025-26 prices£191,068m | | |
| 2022–23Details | £158,048m | £179,089m |
| Real, 2025-26 prices£179,089m | | |
| 2023–24Details | £168,389m | £181,269m |
| Real, 2025-26 prices£181,269m | | |
| 2024–25Details | £170,994m | £176,885m |
| Real, 2025-26 prices£176,885m | | |
| 2025–26Details | £179,861m | £179,861m |
| Real, 2025-26 prices£179,861m | | |






Figures for the 2025–26 financial year. Source:
[HM Revenue and Customs](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk), [HM Treasury](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp).




It raised more than the year before, but the other taxes grew faster, so its share of the total fell.




**VAT as a share of the economy, 1946–47 to 2022–23**










**The numbers behind this chart**



Search




| Financial year | % of GDP |
| --- | --- |
| 1946–47 | 4.662% |
| 1948–49 | 5.234% |
| 1950–51 | 4.757% |
| 1952–53 | 3.965% |
| 1954–55 | 3.716% |
| 1956–57 | 3.275% |
| 1958–59 | 3.193% |
| 1960–61 | 3.108% |
| 1962–63 | 2.998% |
| 1964–65 | 2.743% |
| 1966–67 | 2.583% |
| 1968–69 | 2.36% |
| 1970–71 | 1.979% |
| 1972–73 | 1.603% |
| 1974–75 | 2.836% |
| 1976–77 | 2.787% |
| 1978–79 | 2.63% |
| 1980–81 | 4.421% |
| 1982–83 | 4.509% |
| 1984–85 | 5.259% |
| 1986–87 | 5.185% |
| 1988–89 | 5.235% |
| 1990–91 | 5.005% |
| 1992–93 | 5.568% |
| 1994–95 | 5.664% |
| 1996–97 | 5.595% |
| 1998–99 | 5.779% |
| 2000–01 | 5.876% |
| 2002–03 | 6.005% |
| 2004–05 | 6.168% |
| 2006–07 | 6.138% |
| 2008–09 | 5.635% |
| 2010–11 | 6.212% |
| 2012–13 | 6.793% |
| 2014–15 | 6.84% |
| 2016–17 | 6.895% |
| 2018–19 | 6.972% |
| 2020–21 | 6.626% |
| 2022–23 | 7.392% |











Figures for the 2022–23 financial year. Source:
[Office for Budget Responsibility](https://obr.uk/data/).





**How "real terms" is worked out**



Real terms use HM Treasury's GDP deflator, rebased to 2025-26 prices. That is the
measure the Treasury and the OBR use for public finances; the consumer price index is the
right one for a shopping basket, not for the size of the state.






## How does it work?



VAT is charged at each stage of production, but each business reclaims the VAT it paid on its inputs, so the tax collected in total is just the rate applied to the final price. That is the mechanism that makes it hard to avoid and cheap to administer.

Three rates apply, and the law rather than the price decides which one a thing falls under.




| Rate | Charged | Covers, for example |
| --- | --- | --- |
| StandardDetails | 20% | most goods and services |
| Covers, for examplemost goods and services | | |
| ReducedDetails | 5% | domestic gas and electricity, children's car seats, home insulation and other energy-saving materials, mobility aids for older people |
| Covers, for exampledomestic gas and electricity, children's car seats, home insulation and other energy-saving materials, mobility aids for older people | | |
| ZeroDetails | 0% | most food, children's clothes and shoes, books, newspapers and magazines, prescription medicines, public transport fares, new-build housing |
| Covers, for examplemost food, children's clothes and shoes, books, newspapers and magazines, prescription medicines, public transport fares, new-build housing | | |
| ExemptDetails | – | most insurance, postage stamps, education and training, healthcare (no VAT, and the seller cannot reclaim VAT on its own costs) |
| Covers, for examplemost insurance, postage stamps, education and training, healthcare (no VAT, and the seller cannot reclaim VAT on its own costs) | | |





Rates: [GOV.UK, VAT rates](https://www.gov.uk/vat-rates).
Checked by hand 22 September 2026.

Zero-rated and exempt are not the same thing, and the difference matters to businesses. A zero-rated seller charges no VAT but can still reclaim the VAT on their costs. An exempt seller charges none and cannot reclaim, so the tax gets stuck in the middle of the chain.



### What does this mean for you?



Put in what you spend in a month on things charged the standard rate: most things except food, children’s clothes, books and fares.


Monthly spending at the standard rate
£



Of £800, **£133** is VAT: one pound in every six. Over a year that is about **£1,600**.



At the 20% standard rate, the VAT inside a price is 20/120 of it. Reduced-rate energy and zero-rated food add less, or nothing.





The zero rates are what make VAT less regressive than it looks. Poorer households spend more of their income on food, energy and children’s clothes, all of which are zero- or reduced-rated. Measured against spending rather than income, VAT is close to flat.



### A £60 pair of shoes





| Step | Amount | Note |
| --- | --- | --- |
| Price on the shelfDetails | £60.00 | |
| | | |
| VAT included in that priceDetails | £10.00 | one sixth of the price, because 20% is added to the pre-tax £50 |
| Noteone sixth of the price, because 20% is added to the pre-tax £50 | | |
| The shop keepsDetails | £50.00 | |
| | | |
| If they were children’s shoesDetails | £0.00 VAT | children’s shoes are zero-rated |
| Notechildren’s shoes are zero-rated | | |





**VAT at 20% is always exactly one sixth of the price you pay, never one fifth. That is the most common arithmetic mistake about it.**




[Add or remove VAT on your own figures](https://howlongisit.co.uk/vat-calculator)





## How has it changed?




**Standard rate of VAT**








Each change in the standard rate. The 2008 cut to 15% lasted thirteen months, to the start of 2010.




**The numbers behind this chart**





| From | Rate |
| --- | --- |
| 1973 | 10% |
| 1974 | 8% |
| 1979 | 15% |
| 1991 | 17.5% |
| 2008 | 15% |
| 2010 | 17.5% |
| 2011 | 20% |









**VAT registration threshold each tax year**


- VAT registration threshold





2010–11: £70,000 → 2026–27: **£90,000**



Each panel starts at zero on its own scale. Cash values, not adjusted for inflation: a flat line is a freeze, and a freeze is a real-terms cut.




**Show as a table**





| Tax year | VAT registration threshold |
| --- | --- |
| 2010–11 | £70,000 |
| 2011–12 | £73,000 |
| 2012–13 | £77,000 |
| 2013–14 | £79,000 |
| 2014–15 | £81,000 |
| 2015–16 | £82,000 |
| 2016–17 | £83,000 |
| 2017–18 | £85,000 |
| 2018–19 | £85,000 |
| 2019–20 | £85,000 |
| 2020–21 | £85,000 |
| 2021–22 | £85,000 |
| 2022–23 | £85,000 |
| 2023–24 | £85,000 |
| 2024–25 | £90,000 |
| 2025–26 | £90,000 |
| 2026–27 | £90,000 |






Figure as of 22 September 2026. Source:
[Office for Budget Responsibility](https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf).




How it got here, and why each change was made:



- **1973**VAT replaces Purchase Tax when the UK joins the European Economic Community, which required it. It starts at 10%.
- **1979**Nearly doubled from 8% to 15% to pay for large cuts in income tax, a deliberate shift from taxing earning to taxing spending.
- **1991**Raised to 17.5% to pay for cutting the poll tax.
- **2008**Cut to 15% for thirteen months as a stimulus during the financial crisis.
- **2011**Raised to 20%, where it has stayed.
- **2025**Private school fees become standard-rated at 20%, having previously been exempt as education. Around 7% of UK children attend private schools.






## Where does the money go?



**Nowhere in particular.** VAT is not earmarked. It goes into the Consolidated Fund with almost every other tax and is spent on whatever the government of the day decides. Anyone who tells you a particular tax "pays for" a particular service is describing an illustration, not a rule.



Because it is not earmarked, the only honest way to show what it pays for is by proportion. If
vat receipts of £179.9bn were spent in the same proportions as all
public spending in 2025-26, they would break down like this. It is an illustration of scale,
not a statement about where those particular pounds went.




**If £179.9bn of vat were spent like all public money in 2025-26**



- 1. Social protection, including the state pension

£59.7bn 33.2% of spending
- 2. Health

£37.8bn 21% of spending
- 3. Debt interest

£19.1bn 10.6% of spending
- 4. Education

£18.3bn 10.2% of spending
- 5. Economic affairs, including transport

£13.8bn 7.7% of spending
- 6. Defence

£9.5bn 5.3% of spending
- 7. Public order and safety

£8.1bn 4.5% of spending
- 8. General public services

£5.2bn 2.9% of spending
- 9. Housing and community

£3.2bn 1.8% of spending
- 10. Environment

£2.9bn 1.6% of spending
- 11. Culture, media and sport

£2.2bn 1.2% of spending





Spending shares from HM Treasury’s Public Expenditure Statistical Analyses. An illustration of scale, not where these particular pounds went.




**Show as a table**





| Name | Equivalent share of vat |
| --- | --- |
| 1. Social protection, including the state pension | £59.7bn |
| 2. Health | £37.8bn |
| 3. Debt interest | £19.1bn |
| 4. Education | £18.3bn |
| 5. Economic affairs, including transport | £13.8bn |
| 6. Defence | £9.5bn |
| 7. Public order and safety | £8.1bn |
| 8. General public services | £5.2bn |
| 9. Housing and community | £3.2bn |
| 10. Environment | £2.9bn |
| 11. Culture, media and sport | £2.2bn |








See [for every £100 of tax](/for-every-100-pounds-of-tax/) for the full picture.





## Is it different where I live?




### Scotland



VAT cannot be devolved under EU-derived rules that still apply, so the rate is the same across the UK. A share of Scottish VAT receipts is assigned to the Scottish budget, but Scotland cannot change the rate.





## Does it change what people do?



The 2008 cut to 15% is one of the better-studied stimulus measures. The evidence suggests retailers passed most of it on and it did lift spending, but modestly relative to its cost, partly because a temporary cut is a weak signal when people expect it to reverse.



[When a tax rise stops raising money](/when-tax-rises-lose-revenue/) looks at the
cases where the effect has been large enough to move the revenue.





## How does that compare with other countries?



**In 2024 the UK raised 7.0% of GDP this way: fifth of the 12 countries compared here.**




**Revenue from this heading as a share of GDP, 2024**



- 1. Denmark

9.1%
- 2. Sweden

8.7%
- 3. France

7.1%
- 4. Netherlands

7.0%
- ◆5. United Kingdom

7.0%
- 6. Germany

6.9%
- 7. Italy

6.6%
- 8. Spain

6.4%
- 9. Japan

5.0%
- 10. Canada

4.7%
- 11. Ireland

3.9%
- 12. United States

0.0%




◆ UK





**Show as a table**





| Name | Share of GDP |
| --- | --- |
| 1. Denmark | 9.1% |
| 2. Sweden | 8.7% |
| 3. France | 7.1% |
| 4. Netherlands | 7.0% |
| 5. United Kingdom (UK) | 7.0% |
| 6. Germany | 6.9% |
| 7. Italy | 6.6% |
| 8. Spain | 6.4% |
| 9. Japan | 5.0% |
| 10. Canada | 4.7% |
| 11. Ireland | 3.9% |
| 12. United States | 0.0% |






Figure as of 1 January 2024. Source:
[OECD](https://data-explorer.oecd.org/vis?df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_REV_COMP_OECD%40DF_RSOECD).




At 20%, the UK standard rate is close to the EU average and below France, Italy and the Nordic countries. What is unusual is the breadth of the UK’s zero rates: most countries tax food at a reduced rate rather than at nothing.




**What is being compared**




Countries are those this site compares throughout, not the whole OECD, and a country appears only
where it reports this heading for 2024.






## What are the arguments?





### The case for VAT



- Very hard to avoid, because the chain of reclaims creates a paper trail.
- Taxes spending rather than work, so it does not discourage earning.
- Broad base means a large amount of revenue from a moderate rate.
- Zero rates on food, energy and children’s goods blunt the effect on poorer households.





### The case against



- Measured against income rather than spending, it takes a larger share from poorer households.
- The line between zero-rated and standard-rated is arbitrary and litigated constantly.
- Compliance falls heavily on small businesses near the registration threshold.
- The threshold creates a cliff that discourages small firms from growing.






Both columns are set out as their strongest case, not as a preferred answer and a strawman. See
[how this site handles contested questions](/neutrality/).





## Common questions


How much VAT do I pay, and on what?
A tax on most spending, charged at 20% on the standard rate, collected by businesses at every stage and ultimately paid by whoever buys the finished thing. Everyone who buys anything standard-rated. Businesses collect it and reclaim what they paid on their own purchases, so the tax lands on the final consumer.How much does vat raise?
£179.9bn in 2025–26, which is 19.2% of everything HMRC collects.Where does vat go?
Nowhere in particular. VAT is not earmarked. It goes into the Consolidated Fund with almost every other tax and is spent on whatever the government of the day decides. Anyone who tells you a particular tax "pays for" a particular service is describing an illustration, not a rule.





## Use this data



The figures belong to the bodies that published them and are used under their terms, listed in
[Sources for this page](#sources); most are Crown copyright under the Open Government Licence.
Only our own words, analysis, charts and derived calculations are ours, published under
[CC BY 4.0](https://creativecommons.org/licenses/by/4.0/): reuse them, including
commercially, if you credit [Tekstak Ltd](https://tek-stak.co.uk) and link back to this page.



### Download



- [VAT receipts by financial year (CSV)](/data/receipts-vat.csv)
[JSON](/data/receipts-vat.json) HM Revenue and Customs: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)
- [Public sector receipts as a share of GDP since 1900 (CSV)](/data/obr-total-receipts-share-gdp.csv)
[JSON](/data/obr-total-receipts-share-gdp.json) Office for Budget Responsibility: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)
- [Total HMRC receipts by financial year (CSV)](/data/receipts-total.csv)
[JSON](/data/receipts-total.json) HM Revenue and Customs: [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/)

- [All data, field definitions and licences](/data/)




### Embed the live figure



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## Sources for this page





| Source | Publisher | Figures as of | Updated | Licence |
| --- | --- | --- | --- | --- |
| [HMRC tax receipts and National Insurance contributions for the UK](https://www.gov.uk/government/statistics/hmrc-tax-and-nics-receipts-for-the-uk) | HM Revenue and Customs | the 2025–26 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [Historical public finances database](https://obr.uk/data/) | Office for Budget Responsibility | the 2022–23 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [GDP deflators at market prices, and money GDP](https://www.gov.uk/government/collections/gdp-deflators-at-market-prices-and-money-gdp) | HM Treasury | the 2025–26 financial year | annual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [Office for Budget Responsibility, Economic and fiscal outlook, November 2025, Box 3.3](https://obr.uk/docs/dlm_uploads/OBR_Economic_and_fiscal_outlook_November_2025.pdf) | Office for Budget Responsibility | 22 September 2026 | semiannual | [Open Government Licence v3.0](https://www.nationalarchives.gov.uk/doc/open-government-licence/version/3/) |
| [Revenue Statistics: comparative tables](https://data-explorer.oecd.org/vis?df[ds]=dsDisseminateFinalDMZ&df[id]=DSD_REV_COMP_OECD%40DF_RSOECD) | OECD | 1 January 2024 | annual | [CC BY 4.0 (OECD)](https://www.oecd.org/en/about/terms-conditions.html) |





Each source's figures are used under the licence shown. Our own words, analysis, charts and derived calculations
are ours, under [CC BY 4.0](https://creativecommons.org/licenses/by/4.0/).

## Related pages

- [Next in this section: Fuel duty: the rate, and how it got there](https://whereyourmoneygoes.co.uk/fuel-duty/)
- [How much tax is in petrol?](https://whereyourmoneygoes.co.uk/tax-on-petrol/)
- [How much of my energy bill is tax?](https://whereyourmoneygoes.co.uk/tax-on-energy-bills/)
- [How much are HMRC penalties and interest, and how much do they raise?](https://whereyourmoneygoes.co.uk/hmrc-penalties-and-interest/)

## More from this publisher

- [UK tax calculators](https://howlongisit.co.uk)

Published by [Tekstak Ltd](https://tek-stak.co.uk). Our words, analysis, charts and derived calculations: CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/), credit [Tekstak Ltd](https://tek-stak.co.uk). The figures belong to the publishers listed under Sources and are used under their licences. Figures last updated 29 September 2026.