When it comes to paying your VAT bill to HMRC, you have several options, including Direct Debit, online card payment, or bank transfer.
VAT Payment Deadlines
The deadline for paying your VAT bill appears on your VAT return. If you submit VAT monthly or quarterly, the payment deadline typically falls one calendar month and seven days after the VAT period ends.
For instance, if your VAT period ends on 31 March, you must pay by 7th May. However, if your business is on the VAT Annual Accounting Scheme, the process differs slightly. Despite annual submissions, you’ll need to make advance payments towards your estimated bill monthly or quarterly.
VAT Payment Methods
HMRC allows VAT payments through various methods:
- Via your online bank account
- By bank transfer
- Using a debit or corporate credit card through your VAT online account (note: personal credit cards are not accepted for HMRC payments)
- Through your bank or building society
- By standing orders
Always include your VAT number as a reference when making a payment, as indicated on your VAT return and any HMRC correspondence about your VAT registration.
Handling Late VAT Payments
If you can’t pay your VAT bill on time, contact HMRC immediately. Delaying payment typically results in an automatic penalty. However, you might be able to arrange a Time to Pay agreement and settle your VAT bill in installments.
Other VAT Management Options
Some businesses find that different VAT accounting schemes better suit their cash flow, making it easier to manage VAT bills. The right scheme depends on your business’s specifics.
For example, the VAT Cash Accounting Scheme lets you pay VAT based on when you receive payment from your customer, not the invoice date. This approach is helpful if you have clients who pay late or if you’re dealing with VAT reclaims from non-paying customers.