Whether you a sole trader or limited company new start up or an early stage business and have just recently registered for VAT in the UK, then one of the questions on your mind may be how to pay VAT in the UK?
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⏱️ Time Stamps:
0:41 - When do you need to pay VAT?
2:11 - Payment Options for VAT
2:56 - How to set up a direct debit
4:05 - What if you pay late?
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Payment Methods for your VAT bill
Number 1 and perhaps the most popular method is by BACS, via your business bank account. A BACS payment can take 3 working days to clear so you will need to make sure you providing for this time and the payment reaches HMRC on time.
Secondly, if you're a little close the deadline, a faster CHAPS payments usually reaches HMRC the same working day, depending on your business bank provider.
A lastly by direct debit, a suggested method of payment.
What happens if you pay your VAT bill late?
Now there are TWO aspects to the word late when it comes to VAT.
Firstly, if HMRC receive your VAT return late.
And secondly if HMRC receive your payment late.
We're going to look at late payments where actual VAT is due, although the surcharges are the same for both. If the full VAT payment has not reached HMRCs bank account by the required date, then they will record a 'default' against your businesses Vat account with them.
Your business will then enter a surcharge period which spans a 12 month period.
We hope this video has developed your understanding on VAT and taken you one step closer to knowing your numbers. Be sure to let us know in the comments your thoughts on today's video and what else you'd like to see us cover in the future!
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