If your business has a turnover of more than £85,000, you are legally required to register for and pay Value Added Tax (VAT). In this guide, we’ll be explaining everything you need to know about submitting your VAT return and paying your bill.
What is VAT?
VAT is a tax charged on certain goods, services and other ‘taxable supplies’ provided by businesses in the UK.
Businesses with a turnover of £85,000+ must register for VAT and submit a return to HM Revenue and Customs (HMRC).
What Kind of Things are Taxable?
- Sales of goods and/or services
- Hire or loan of your goods
- Commission
- Exchanged e.g. swapping a new product for the exchange of the customer’s old one
- Staff sales e.g. employee meals
- Business goods you use personally
- The sale of business assets
Does My Business Need to Pay VAT?
If your company turns over more than £85,000, you must charge VAT on all of the goods and services offered by your business. You can also reclaim VAT on goods and services purchased by your business.
What is the Current VAT Rate?
| Rate | % of VAT | What the Rate Applies to |
| Standard | 20 | Majority of goods and services |
| Reduced | 5 | Select goods and services e.g. home energy bills and children’s car seats |
| Zero | 0 | Zero-rated goods and services e.g. children’s clothes and most food |
What is VAT Exempt?
Certain goods and services are exempt from VAT. These include:
- Education and training
- Charitable fundraising
- Selling/letting commercial properties
- Insurance and finance service
- Postage stamps
What Can I Reclaim VAT On?
VAT registered businesses are able to reclaim goods and services that are used for operational purposes, such as:
- Business vehicles
- Fuel and vehicle maintenance
- Staff travel
- Mobile service plans (for business calls)
- Utility bills (for home businesses during operating hours)
When Must I Submit My Return and Pay My VAT?
You typically need to send a VAT return to HMRC on a quarterly basis (every 3 months). This is your accounting period.
Even if you have no VAT to pay or reclaim, it is still necessary for you to submit your return on time if you’re registered.
The deadline for doing so is usually one calendar month and 7 days after the end of an accounting period. This is also the deadline for paying HMRC, so it’s essential that you allow time for the payment to reach HMRC’s account, or you may be penalised for paying late.
How Can I Pay My VAT Bill?
If you haven’t yet registered for VAT, you must register online using the government website. You will then be able to submit your VAT returns to HMRC.
There are few ways in which you can pay your VAT bill. To pay the same or next day, online or telephone banking are the best methods as they are typically a lot faster.
To pay within three working days, you make payments via direct debit, bacs, standing order or at your bank.
Expert VAT Advice
The ever growing demands of HMRC call for a trained professional eye, so you can be sure you aren’t falling foul of the regulations and end up paying the Exchequer more than you need to!
At Ryans, we provide an efficient cost effective VAT service, which includes:
- Assistance with VAT registration
- Advice on VAT planning and administration
- Use of the most appropriate scheme
- VAT control and reconciliation
- Help with completing VAT returns
- Planning to minimise future problems with HMRC
- Negotiating with HMRC in disputes and representing you at VAT tribunals
To save yourself time and potentially a lot of money, get in touch with our team today!
For more advice on maximising your VAT claims, check out our handy guide!