VAT began in the UK in 1973. It replaced an older purchase tax when the UK joined the European Economic Community. The standard rate started at 10% and has risen over the years to 20% today.
How the rate has changed
[ Chart: UK standard VAT rate since 1973 ]
Type: line chart. Data points: 1973 at 10%, 1974 at 8%, 1979 at 15%, 1991 at 17.5%, December 2008 at 15%, January 2010 at 17.5%, January 2011 at 20%.
Alt text: Line chart of the UK standard VAT rate from 1973 to today, rising from 10 percent to 20 percent.
Caption: The UK standard VAT rate over time.
| Date | Standard rate |
|---|---|
| April 1973 | 10% |
| July 1974 | 8% |
| June 1979 | 15% |
| April 1991 | 17.5% |
| December 2008 | 15% |
| January 2010 | 17.5% |
| January 2011 | 20% |
The early years
VAT started on 1 April 1973 at 10%, taking over from purchase tax and selective employment tax. In 1974 the standard rate was cut to 8%, though a higher rate applied to some luxury goods for a time.
The move to 15% and 17.5%
In 1979 the rate rose to 15%, and the separate higher rate was dropped. In 1991 it went up again to 17.5%, where it stayed for most of the next two decades.
The 2008 cut and the rise to 20%
In December 2008 the rate was cut to 15% for just over a year, to support spending during the financial crisis. It returned to 17.5% in January 2010. Then on 4 January 2011 it rose to 20%, where it remains.
VAT after Brexit
Since leaving the European Union, the UK sets its own VAT rules rather than following EU rules. In practice the standard rate has stayed at 20%, but the UK now has more freedom to change rates and reliefs on its own.
Frequently asked questions
When did VAT start in the UK? VAT began on 1 April 1973, replacing purchase tax when the UK joined the European Economic Community.
What was the first UK VAT rate? The standard rate started at 10% in 1973.
When did VAT become 20%? The standard rate rose to 20% on 4 January 2011.
Was VAT ever lower than today? Yes. It was 8% in the mid 1970s and was cut to 15% for just over a year from December 2008.
Has Brexit changed VAT? The UK now sets its own VAT rules, though the standard rate has stayed at 20%.