After filing your first VAT return, you may wonder how to pay your VAT bill for the VAT you have collected. Collecting VAT is an essential task for HMRC around six per cent of all UK national income came from VAT in 2019-20 so, fortunately, quite a few payment methods are available. Just choose one that fits your circumstances.
Businesses in the UK must start charging VAT once their turnover reaches a certain threshold (currently £85,000). Once that happens, they must register for VAT. This can be a confusing process, so many employ the services of VAT specialist accountants at this point.
Once a business reaches the end of its first VAT period, it must file its VAT return and then make a payment if one is due. When filing your return, VAT collected will be assessed against VAT paid, and a final sum will be due. Some companies may find that a VAT repayment is due to them, although most will owe a sum. This payment is made to HMRC, and there are several ways of doing it.
How do I pay my VAT bill?
If a payment is due to HMRC, you should first make sure you have the correct final sum and that you are aware of the deadline for VAT return payments. Then, you can assess your business payment arrangements and decide which fits you best as long as your payment arrives on time, it does not matter which method you use.
Fortunately, making payments to HMRC is relatively simple and includes online, telephone and in-person methods. Any penalties due can also be paid using these systems.
How to pay VAT?
Paying VAT online is by far the easiest and simplest method. Some of these processes are incredibly fast and will arrive on the same day. You’ll need your company’s VAT number this will be used as part of the payment reference, and it must be entered correctly to avoid any queries or delays.
You have several options for paying VAT online:
1. Pay VAT by BACS/CHAPS
Online banking using the Faster Payments service, CHAPS or BACS: These methods all have advantages and disadvantages. Faster payments usually arrive the same day, whereas BACS is a bit slower. CHAPS is guaranteed to reach HMRC’s bank account on the same day but involves cut-off times and extra costs. To pay VAT using one of these methods, log in to your online banking and use HMRC’s VAT bank account details as the recipient. (Don’t forget to use your VAT number as the reference!)
2. Pay VAT by Direct debit
Direct debits can be arranged in advance and are by far the simplest way of paying your return. After filing your return, HMRC will automatically collect the payment just make sure there is enough in the account to cover it.
3. Pay VAT by debit/credit card or corporate bank account
Log in to HMRC’s VAT payment portal and sign in with your VAT details. You can then proceed through steps to pay your return.
Other ways to pay your VAT bill
The majority of VAT payments are now made online. However, the process can come with many other questions.
How do I pay VAT by phone?
It’s not possible to pay your VAT bill over the phone to HMRC, but you can pay via telephone banking if your bank allows.
Are there other ways to pay your VAT bill?
With special VAT arrangements, it’s possible to pay via standing order or by visiting your bank branch.
Can I pay VAT in instalments?
There is no option to pay VAT in instalments; however, if you are struggling to pay VAT owed, you should contact HMRC, who may offer solutions.
What VAT payments can I defer?
The VAT deferral scheme was an option for companies during the height of the Covid-19 pandemic but is no longer open.
How do I get VAT repayments?
If HMRC owes you a VAT repayment after filing, it will be transferred to your registered account or sent as a cheque.
Do I need an accountant for VAT?
It’s critical to make VAT filings and payments correctly to avoid penalties, and, for many, hiring an accountant can ease the burden of calculating and submitting returns. Contact UWM today for expert advice on your VAT payments.
