In the UK, submitting VAT returns and adhering to the VAT payment deadline is a major aspect of the various financial compliances that businesses have to maintain. VAT (Value Added Tax) is an indirect tax, collected at each stage of the production and distribution of goods and services. In the UK, the standard VAT rate is 20% and a reduced 5% or 0% for certain goods and services. Any company in the UK that is a non-resident trader essentially has to file periodic reports on taxable transactions to His Majesty’s Revenue and Customs (HMRC). These detailed reports offer a comprehensive overview of a company's taxable activities over a specified period. Now, it is to be noted that VAT return filings are mandatory. Subsequently, it is extremely important to be well aware of the VAT payment deadlines. Missing out on the due date of payments can attract fines and penalties, which every business would like to avoid.
In this blog, we will discuss all the necessary information surrounding the VAT payment deadline in the UK. The VAT payment deadlines can be confusing. While as a business owner, you can always help from expert accountants in London or the UK, it is best recommended that you have a basic idea about VAT payment deadlines and due process.
What is the VAT Payment Deadline?
As the name suggests it is the deadline within which businesses must submit their VAT returns to the HMRC. Businesses must comprehend and fulfil the VAT payment deadline, as they have particular dates as deadlines to repay any outstanding VAT liabilities. usually on a quarterly or annual basis. Meeting these dates assures regulatory compliance, helps firms and UK tax authorities stay out of trouble, and promotes transparency in the financial system. Timely and accurate VAT returns are crucial for compliance, and any discrepancy may result in penalties or fines.
Frequency of VAT Returns
In the UK, VAT returns are usually done every quarter. If as a tax-paying business owner, you deal with regular repayment traders like frequent exporters, you may request monthly VAT returns. On the other hand, the HMRC can also ask a business or a company for monthly accounts payable. When filing the quarterly VAT return, these advanced payments are subtracted from the total quarterly payment. Note that monthly accounts payable are applicable if the VAT liability of a business exceeds £2.3 million.
In the UK, the quarterly period related to the VAT payment deadline is not as same as the calendar quarter. The VAT payment quarter of a business depends on the period when the business registers online for VAT services.
Now if the taxable turnover of a business is lower than £1.35 million, it is eligible for VAT returns. However, the Annual VAT Accounting scheme and returns can be availed if and only if advanced VAT payments are made. To avail of the annual VAT returns, only one return has to be submitted against the complete cycle of the 12 months.
Given below is a table to help you identify the frequency of VAT returns –
VAT Payment Particulars
For Regular Repayment Traders, on request
Standard reporting frequency
On request, If payment liability is less than £1.35 million
VAT Payment Deadline
Now that we have discussed the various frequency of filing VAT returns, the next important discussion is to know about the VAT payment deadlines. Here are some of the points that you should take note of regarding the VAT payment deadline –
- All relevant information regarding your VAT returns and the VAT payment deadline for your business can be found in your HMRC online account.
- In the UK, the 7th day of the second month after the reporting period is often the deadline for submitting and paying VAT returns.
- Note that those businesses which are part of the Payments on Account scheme have different deadlines.
- If the VAT payment due date falls on a Sunday, then the VAT payment deadline is postponed to the next working day.
- During your accounting period, you must pay your VAT bill in advance (either monthly or quarterly), and then you have to make a final payment when you file your VAT return.
Here is a breakdown of the VAT payment deadline for your easy reference –
At the end of months 4, 5, 6, 7, 8, 9, 10, 11 and 12
At the end of months 4, 7 and 10
Final Annual Payment
Within 2 months of month 12
How Much VAT You Have to Pay By Each Deadline
Till now we have developed a good idea about VAT returns, the frequency of VAT payments and the various VAT payment deadlines. The discussion surrounding all the relevant details of the VAT payment deadline will be incomplete if you are not aware of how much VAT you have to pay for each deadline. Along with the VAT payment deadline, it is equally important to know the VAT payment amount.
- For monthly VAT payments, the payment has to be 10% of your estimated VAT bill
- For quarterly VAT payments, the payment has to be 25% of your estimated VAT bill
- Note that His Majesty’s Revenue and Customs (HMRC) will inform you in writing about your VAT payment instalments and the due amount of every instalment
- The final payment that you will make, is also referred to as “balancing payment” as it is the balance amount between your advance VAT payment and actual VAT bill amount.
- In case your advanced VAT payments add up to be more than your actual VAT payment obligation, then you automatically become eligible for a VAT return from the HMRC.
Do You Need Help With Your VAT Payment?
Unicorn Accountants is a reliable partner for businesses, ensuring not only timely VAT payments in adherence to deadlines but also comprehensive VAT-related services. Whether it is encompassing documentation or making accurate calculations, we got you and your business covered. Specialising in various financial facets, we extend our expertise beyond VAT, offering a spectrum of services including audit, bookkeeping, and accounting. With a commitment to regulatory compliance and financial transparency, Unicorn Accountants could be a much-needed resource for your businesses if you are seeking a holistic approach to managing the financial needs of your business.