What is the VAT rate applied to domestic fuel?

The VAT rate applied to domestic fuel in the UK is indeed 5 percent. This lower rate is designed to reduce the financial burden on households for essential energy costs, particularly during the colder months. It reflects the government's commitment to making essential goods and services more affordable for consumers.

The standard rate of VAT is 20 percent, which applies to most goods and services, but essential supplies like domestic fuel are taxed at a lower rate to recognize their necessity for everyday living. The zero percent rate option is incorrect as it applies to certain goods and services, but not specifically to domestic fuel. Similarly, the exempt choice does not apply because domestic fuel is not exempt from VAT; it is subject to this reduced rate. Understanding these distinctions is critical for properly applying VAT in various contexts.