How much VAT do I pay to HMRC?

Most goods and services are charged at the standard rate of 20%. You should charge this rate unless the goods or services are classed as reduced or zero-rated. Get a list of reduced or zero-rated goods and services.

How do I work out how much VAT to pay HMRC?

Example VAT calculation formula:

For example, if your business charged a total of £12,000 of VAT on the goods and services it sold (output VAT) and it paid £2,000 in VAT on products and services it bought (input VAT) the VAT calculation would be: £12,000 (output VAT) – £2,000 (input VAT) = £10,000 in VAT to pay HMRC.

What do you pay VAT on HMRC?

VAT is charged on things like: goods and services (a service is anything other than supplying goods) hiring or loaning goods to someone. selling business assets.

Do you pay VAT on the first 85000 HMRC?

No, you do not pay VAT on the first £85,000 (now £90,000 as of April 2024). VAT only applies after you register, and it is not retroactively charged on turnover before registration. Once registered, you must charge VAT on all taxable sales moving forward.

What is the VAT threshold in the UK?

Businesses that have a turnover of below £90,000 per year are exempt from charging their customers VAT. Copyright 2025 Alliance News Ltd. All Rights Reserved.

Do You Have to Pay VAT on Your First £85,000 to HMRC 2023/2024 (Ltd) Limited Company

How to avoid VAT threshold?

What Is Business Splitting? Splitting a business involves dividing one business into multiple entities to keep each entity's turnover below the VAT registration threshold. Business owners sometimes do this to avoid having to apply VAT and keep individual splits below the registration threshold.

Who is exempt from paying VAT in the UK?

VAT exempt items

Education and training from eligible schools, colleges, or universities. Charity donations and events. Health services. Insurance, financial services, and investment.

What if I go over VAT threshold without realising?

Register for VAT: You must register for VAT with HMRC within 30 days of exceeding the threshold. Failing to register on time can lead to penalties. Calculate and Pay VAT: From the date you are required to register, you must charge VAT on your sales and pay this to HMRC.

When must VAT be paid to HMRC?

Each VAT return must be submitted usually one calendar month and seven days after the end of the relevant quarter. For example, the VAT return from 1 January to 31 March 2025 must be filed with HMRC by 7 May 2025.

Do you pay VAT on turnover or profit?

If a company is VAT registered, then no, VAT is not included in its turnover. Turnover is the common term for sales, and its overall sum is the amount that has been billed to customers without VAT. VAT is added afterwards at whatever rate it's set, usually 20%. To find out more about taxable turnover and VAT, read on.

How does HMRC check VAT?

On-site visit: An HMRC officer will visit your premises to inspect records and may ask questions about your VAT processes. They'll likely focus on areas like sales, purchases, and how you've calculated VAT on your transactions.

How do HMRC repay VAT?

HMRC processes your repayment automatically when you submit your VAT Return. Your repayment will go direct to your bank account if you gave HMRC bank details for your repayment. Otherwise HMRC will send you a cheque (also known as a 'payable order').

How do I pay my VAT bill to HMRC?

Pay your VAT bill online

You can pay HM Revenue and Customs ( HMRC ) online by: approving a payment through your bank account using your online banking details. debit or corporate credit card.

How do I calculate my VAT payable amount?

How to avoid paying VAT tax?

How do I claim VAT back?

Claiming back VAT involves completing a VAT Return – usually each quarter. If completing the VAT Return form online on HMRC's website, you must enter how much VAT your business was charged in that three-month accounting period for goods and services you are able to claim VAT on. This is known as input VAT.

How to apply for VAT exemption?

Businesses that qualify for VAT exemption should submit the necessary applications and supporting documents to the Bureau of Internal Revenue (BIR) for evaluation. Once approved, these entities must adhere to specific accounting and reporting requirements.

What happens if I temporarily go over the VAT threshold?

Your VAT bill is calculated by reducing the VAT you've charged your customers by the amount you've paid to suppliers. Even if you temporarily go over the threshold, you will still be expected to register for VAT and calculate your VAT returns unless HMRC accepts your appeal.

What happens if you avoid paying VAT?

If you still do not pay what you owe, HMRC can take legal action against your business and potentially even force it into liquidation. You could receive a Notice of Enforcement, which gives HMRC the power to seize company assets without having to petition the court.

Is there any way to avoid paying VAT?

Where a taxable person supplies only exempt goods or services, they are not generally entitled to register for Value-Added Tax (VAT). However, in specific circumstances the trader may be required to register and account for VAT.

Do you pay VAT on the first 90,000 HMRC?

If your taxable turnover exceeds the £90,000 threshold in any 12-month period, you have 30 days to inform HMRC and register for VAT. You must also do this if you expect your taxable turnover to go over this limit within the next 30 days. This 12-month period doesn't need to be a tax year.

What is the minimum turnover for a Ltd company?

In terms of how much money your business 'needs', there's no minimum turnover requirement in any legal sense. However, even if you make nothing at all, you are still responsible for all reporting and compliance obligations.

Is it worth being VAT registered as a sole trader?

You might want to do this because you know the VAT you pay out on your purchases will exceed the VAT you must charge on your sales and so by registering for VAT you will be able to claim regular VAT refunds.