HMRC's estimate · edition published 24 Jun 2025
What 1 point on VAT raises
VAT's standard rate applies to most goods and services. It is 20% now; this is what raising it to 21% would raise. The reduced and zero rates, on things such as home energy and food, stay as they are.
HMRC's caveat. HMRC leaves out wider effects on the economy, such as on prices. The sandbox shows an estimate of the one-off effect on prices separately, as a range.
HMRC's figure is for a change either way, so a 1-point cut would lose about as much.
Quote this
HMRC estimates that 1 point on VAT (20% to 21%) would raise £8.8bn in 2026-27 and £9.55bn in 2028-29. Source: HMRC, Direct effects of illustrative tax changes, edition published 24 Jun 2025. https://ledgergov.uk/tax/vat
Where this comes from
From HMRC's Direct effects of illustrative tax changes, the edition published 24 Jun 2025, the latest (on file as HMRC-DE-2025-06). HMRC's row: “Change standard rate by 1 percentage point”.
HMRC works out each figure for a change made at the start of 2026-27, on its own, on the official forecast of the time, and shows each year to 2028-29. It includes how taxpayers respond, where HMRC models it, but no wider effects on the economy. HMRC publishes one figure a year; we show a range of 10% either side of it, our usual band where a source gives none.
See how the numbers are made, or the Autumn Budget 2026 page.