UK VAT only. These are HMRC rules for UK businesses.
The UK Autumn Budget on 28 October 2026 left VAT rates at 20%, 5% and 0%, and kept the registration threshold at £90,000. Nothing you charge changes today. The changes that matter are to who collects VAT and how it is paid, and they start between April 2027 and April 2029.
VAT changes in the Budget, by date
| Start date | What changes | Who it affects |
|---|---|---|
| 1 November 2026 | Public and workplace electric vehicle charging confirmed at 20% in law | Charge point operators and drivers |
| April 2027 | Overseas suppliers charge UK VAT to unregistered businesses | UK businesses that are not VAT registered and buy services from abroad |
| 1 April 2027 | Energy-saving materials go from 0% to 5%, as planned since 2022 | Homes and charity buildings having them installed |
| 30 June 2027 | Last day of 0% on home electricity, three months later than planned | Households and small premises in Great Britain |
| 1 October 2027 | Online marketplaces collect VAT for UK sellers | VAT-registered sellers, and others over £90,000 a year on one platform |
| 1 April 2029 | Direct Debit must be in place for VAT returns | Every VAT-registered business, subject to exemptions still to be set |
| 1 April 2029 | E-invoicing for VAT invoices | VAT-registered businesses issuing invoices |
What did not change
The Budget 2026 document says: "The government is keeping to its commitments on tax, with no increase to the headline rates of income tax, National Insurance contributions or VAT."
- Standard, reduced and zero rates: 20%, 5% and 0%, shown for both 2026 to 2027 and 2027 to 2028 in the Budget rates annex.
- Registration threshold: £90,000. Our threshold guide explains when you must register.
- Deregistration threshold: £88,000.
- Your VAT return and payment deadlines. The deadline calculator gives your dates.
- Late payment penalties for VAT. The penalty calculator shows what paying late costs.
If you sell on Amazon, eBay or another online marketplace
This is the biggest change for online sellers. From 1 October 2027 the marketplace collects the VAT on your sales if you are VAT registered, or if you sell more than £90,000 a year on that one platform. Personal sales, second-hand goods and business-to-business sales are left out. How sellers report these sales has not been published. Read the marketplace rules and three worked examples.
If you are below the VAT threshold
Check what you buy from abroad. From April 2027, overseas suppliers of services will have to charge UK VAT to UK businesses that are not VAT registered. You cannot reclaim that VAT, so it becomes a cost.
Example: overseas service before VAT£100 a month
UK VAT added from April 2027£100 × 20% = £20
Your new monthly cost£100 + £20 = £120
These are example figures. See who is caught by the overseas services change.
If you are VAT registered
Two administrative changes arrive on 1 April 2029. You will need a Direct Debit in place, although you can still pay another way before a cut-off date and HMRC collects anything left unpaid. See how the VAT Direct Debit will work.
VAT invoices will also have to be issued in a specified electronic format. Full policy and technical detail is due by April 2028, so there is nothing to buy yet. See what is known about e-invoicing.
If you pay a home or small business electricity bill
Great Britain keeps 0% VAT on domestic electricity for three more months, so 30 June 2027 is the last day at 0%. HMRC's guidance still has Northern Ireland at 5%, while the Budget says the relief is expected to apply there from April 2027. Gas stays at 5%. See what the extension saves.
Smaller VAT measures
These affect fewer businesses, and we have not written separate articles on them.
- Private hire: operators with fare turnover above a proposed £50 million will charge VAT on the full fare from 2 January 2028.
- Correcting errors: a general duty to correct mistakes, across all taxes, with HMRC Customer Correction Notices, from 1 April 2028.
- Heat batteries: added to the energy-saving materials relief, at 5% from 1 April 2027.
- Land for social housing: sales to housing associations are zero rated from 1 April 2027.
- Tour operators: a call for evidence on the Tour Operators' Margin Scheme. Nothing changes yet.
What to do now
- Check you are under the threshold if you think you are. Your total taxable sales across all platforms count towards the £90,000.
- List the services you buy from abroad if you are not VAT registered.
- Add up your sales per marketplace if you sell online.
- Change any diary note for the electricity rate from 1 April 2027 to 1 July 2027.
Most of these measures still need legislation or HMRC guidance, so details may follow. Our UK VAT change log records each one with its official source, and the VAT calculator uses the current rates.
Source
Budget 2026, HM Treasury, 28 October 2026, and the overview of tax legislation and rates. Electricity dates are from HMRC's VAT Notice 701/19.
Questions
Did the Budget change the VAT threshold?
No. The VAT registration threshold stays at £90,000 and the deregistration threshold stays at £88,000, including for 2027 to 2028.
Did VAT go up in the 2026 Budget?
No. The standard rate stays at 20%, the reduced rate at 5% and the zero rate at 0%.
What is the first VAT change from the Budget that affects small businesses?
The overseas services change in April 2027, for UK businesses that are not VAT registered. Online marketplace collection follows on 1 October 2027.
Do I need to do anything about VAT now?
Nothing is required yet from most businesses. It is worth checking your overseas subscriptions and your sales per marketplace, so the 2027 changes do not catch you out.
Will I have to pay VAT by Direct Debit?
From 1 April 2029 you must have one set up. You can still pay another way before a cut-off date, and HMRC collects anything left unpaid.
