Key facts
- The reduced rate is 5%.
- Applies to specific items like domestic energy, children’s car seats, and sanitary products.
- Some items qualify for the reduced rate only in specific circumstances.
What Is Charged at 5%?
The following supplies attract the 5% reduced rate:[1]
- Domestic fuel and power (gas, electricity for home use)
- Installation of energy-saving materials (insulation, solar panels, heat pumps)
- Children’s car seats
- Sanitary products (reduced from 5% to 0% from January 2021)
- Mobility aids for the elderly
- Smoking cessation products
- Contraceptives
- Residential property conversions (e.g. converting a commercial building into flats)
- Residential renovation (properties empty for 2+ years)
Conditional Reduced Rate
Some items only qualify at 5% in specific circumstances. For example:[2]
- Gas and electricity must be for domestic use (business use is standard-rated)
- Energy-saving materials must be installed in residential property
- Property conversions must meet specific criteria regarding the type of conversion
Note: Sanitary products were reduced from 5% to 0% (zero-rated) on 1 January 2021, following the UK’s exit from the EU.
Frequently Asked Questions
What is the reduced rate of VAT in the UK?
The reduced rate of VAT is 5%. It applies to specific goods and services such as domestic fuel and power, children’s car seats, and energy-saving materials installed in homes.
Is domestic gas and electricity charged at 5% VAT?
Yes, gas and electricity supplied for domestic use is charged at the reduced rate of 5%. However, gas and electricity for business use is charged at the standard rate of 20%.
Are sanitary products still charged at 5% VAT?
No. Sanitary products were reduced from 5% to 0% (zero-rated) on 1 January 2021, following the UK’s exit from the EU.
Does the 5% rate apply to home renovations?
The 5% reduced rate can apply to residential property conversions (e.g. commercial to residential) and renovations of properties that have been empty for two or more years.
Further Reading
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Sources
- VAT rates — GOV.UK
- Reduced rate of VAT — GOV.UK