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Value Added Tax (VAT) is the tax you must pay when buying goods or services. If you are a business, you may be required to register for and collect VAT.

Businesses with a turnover of more than £85,000 (known as VAT registration threshold) must register to pay and add VAT on the products and services they buy and sell and pay this to HMRC when they file their quarterly return.

VAT in the UK is typically charged at:

  • 20% on goods and services
  • 5% is applied to some health, energy, heating, and protective products and services.
  • 0% is applied to a range of products and services to do with health, building, publishing, and kids’ clothing.

Some services and sales of goods are outside the scope of VAT (like stamps, financial and property transactions). Instead, businesses charge VAT based on what they sell and how much money they make.

Your VAT registration number

The government gives your business a unique nine-digit number, prefixed with ‘GB’.

Company numbers are only given to VAT-registered businesses and can be found on your registration certificate, which also outlines when your company passed the registration threshold and when your first VAT return is due.

What is my VAT payment date?

If you need to check your VAT Return and payment deadlines, you can do this by signing into the Government Gateway and accessing your VAT online account.

Your VAT online account will provide you with the following:

  • When your VAT Returns are due
  • When the payment must clear HMRC’s account.

The submission and payment dates tend to be the same, and calculated one calendar month and seven days after the accounting period end.

Example: If your VAT period ends on March 31. Then, by May 7, you will have to pay the VAT owed. If paying by direct debit, payments are usually taken three days after the VAT return deadline.

Online VAT calculator

Visit HMRC’s website to determine when you must make your VAT payment for the current accounting period. You will be unable to use this calculator if you pay on account or use the annual accounting scheme. Use an approved accounting software provider to send your VAT return, and keep digital records.

How does VAT work?

Your company will need to submit VAT returns to HMRC on a monthly, quarterly, or annual basis. The return summarises the VAT collected on sales and the VAT incurred on expenditure during that period. If the collected figure exceeds the VAT incurred, you pay the difference to HMRC. If the VAT incurred is greater, HMRC will refund the difference.

Paying your bill

HMRC only accepts a direct debit or internet banking as a method of payment. They do not accept cheques. If you are having trouble making payments, contact them straight away.

Is your business ready for making tax digital for VAT?

Making Tax Digital (MTD) is changing how UK businesses do their taxes. It is now mandatory for VAT-registered businesses to keep records and submit their VAT returns digitally.

We use approved accounting software Xero, QuickBooks and FreeAgent, and we are fully accredited and MTD compliant.

We will help you file your VAT returns digitally and provide VAT advice and assistance whenever you need it

Our VAT registration service

We will assess your company’s tax efficiency and advise you to switch if necessary. We will also register you for the appropriate VAT scheme, manage the registration process, and inform you of new laws and regulations.

It is not essential to register for VAT straight away until you hit revenues of £85k. If your company is growing and is likely to hit this figure soon, get ahead of the game and register now, giving you complete peace of mind to run and grow your company!

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