VAT Rates

The Standard Rate of VAT

The standard rate of VAT has changed over time, but since 4 January 2011 the rate has been 20%.

The Reduced Rate

The reduced rate of VAT has remained at 5%, even when VAT has varied from 15% to 17.5% to 20%. The reduced rate applies to very few supplies but may be seen on supplies of power.

Registration Threshold

More importantly for academies the threshold at which VAT registration becomes compulsory has changed regularly.

The threshold has been as follows:

• From 1 April 2024 onwards: £90,000
• From 1 April 2017 to 31 March 2024: £85,000
• From 1 April 2016 to 31 March 2017: £83,000
• From 1 April 2015 to 31 March 2016: £82,000
• From 1 April 2014 to 31 March 2015: £81,000
• From 1 April 2013 to 31 March 2014: £79,000
• From 1 April 2012 to 31 March 2013: £77,000
• From 1 April 2011 to 31 March 2012: £73,000

The supplies that count towards the registration threshold are:

• Standard rated supplies
• Reduced rate supplies
• Zero-rated supplies
• “Reverse charge” situations

Do not count the following:

• Non-business supplies (i.e. grant-funded income)
• Other supplies outside the scope of UK VAT
• VAT exempt supplies (even if a business supply)
• Capital items like buildings, equipment and vehicles

The value of relevant supplies needs to be checked every month, looking back over a rolling 12-month period.

Deregistration Threshold

The deregistration threshold is £2,000 less than the registration threshold.

VAT Fraction

The “VAT fraction” is the proportion of the sale price of goods or services that relates to VAT.

Since 4 January 2011 the VAT fraction for standard-rated sales is 1/6th.