Is there an easy way to pay VAT online?

Paying your VAT bill would be complicated enough without being able to do so digitally. Fortunately, the days of filing your taxes using pen and paper are long gone, and it’s easier than ever for businesses to pay their VAT to HMRC online. This guide will explore the different methods of doing so, helping businesses like yours navigate VAT online payments to HMRC with ease.

Although VAT is a consumer-only tax, businesses do initially have to pay it on goods and services they buy but are then able to claim this back from HMRC. This is provided they have paid out more VAT than they’ve collected in the relevant tax period.

However, it can take up to 30 days for businesses to be refunded by HMRC, something that can cause significant financial uncertainty. But with Adsum’s Instant VAT Refund service, we’ll advance these funds within 60 minutes, ensuring that you’re not faced with a deficit because of your VAT bill.

But before you get to the stage of reclaiming VAT, let’s explore how to pay it in the first place.

Simply sign in to your VAT online account to begin the process.

If you haven’t signed up for this service previously, you’ll need a VAT number and a Government Gateway user ID and password, which you’ll receive when you register for VAT. Login to your Government Gateway account and fill in some personal and business details. It’s a good idea to have the following information to hand before you start the process:

• Your VAT number
• Your business address’s postcode
• The date you registered for VAT
• The final month of the last VAT return you submitted
• The figure in Box 5 of your last submitted VAT return

After providing the required information, HMRC will post you a PIN for activation — this can take up to ten days to arrive. Once your account is activated, you’re all set to pay your VAT bill online. The next stage is deciding which payment method to use.

There are a variety of ways to make online VAT payments, with each varying in how long they take and the fees involved.

This type of payment is near-instantaneous, although some banks do have cut-off times for same-day transactions. Faster Payments can be used to make payments of up to £250,000, with fees varying by bank provider.

To use this method, simply select ‘Pay by bank account’ when making your VAT payment online, and confirm it via your online or mobile banking account.

The next option involves setting up a direct debit, which you can do via your online VAT account.

With a direct debit, payments will be taken automatically from your bank account three working days after the due date of your VAT return and will take three days to process.

CHAPS stands for Clearing House Automated Payment System and is a type of bank transfer typically used for high-value transactions, with an extra layer of security provided by the Bank of England. It has no minimum payment amount, although it does typically come with processing fees of between £20 and £30.

Most bank providers offer a dedicated option to make CHAPS payments via their online banking app — the only other thing you need is HMRC’s payment details.

BACS is short for Bankers’ Automated Clearing System and refers to a transfer made between UK banks by direct credit. Unlike direct debits, where HMRC takes the money owed from your bank account automatically, BACS payments involve pushing it to HMRC yourself each time.

Taking up to three days, this method is convenient in that you don’t need to enter HMRC’s details each time you make a payment. Like with CHAPS, it’s possible to make a BACS payment in your online banking app — you just need to sign up for BACS with your bank and have a BACS Service User Number.

HMRC’s BillPay service enables you to make VAT payments online with a personal or business debit card, or a business credit card, the latter two of which are charged a small fee. Personal credit cards can’t be used for this type of payment.

Simply go through the steps on this page to make a payment using BillPay.

To pay your VAT bill via a standing order, you need to be part of the Annual Accounting Scheme When signing up for the scheme, you’re able to ask to pay by standing order and get approval from HMRC.

Do bear in mind that standing orders are only suitable for fixed VAT payments, and not variable types.

Once you’ve chosen your payment method and sent the money to HMRC, be sure to check your online VAT account to see if you’ve received a payment confirmation. HMRC should provide this within 48 hours, though, as outlined above, some payment methods do take up to three working days to clear.

VAT payments must be made within one month and seven days of the relevant period. For example, say a VAT period ends on 31st October, then a business will need to pay its VAT bill by the 7th of December. Companies can use HMRC’s VAT payment deadline calculator to find out when their deadline for VAT payments is, and can also sign in to their online account and opt to receive reminders of their VAT due date.

Failure to pay your VAT bills on time can lead to financial penalties, depending on the type of error and when in the tax year it was made.

Costing just 3% of the refund amount, our service gives businesses total financial certainty throughout the tax year and is very easy and quick to use. Here’s how it works:

1. Create an Adsum account – Signing up takes less than five minutes — input your details, tell us the account you want your VAT refund sent to, and let us access your Government Gateway.
2. Submit your VAT return – You or your accountant send your VAT return as you usually would.
3. Get your VAT refund in 60 minutes – It really is that simple.

The answer to the question of whether it’s easy to pay VAT online is that, yes, doing so is incredibly simple, with multiple ways of paying too. For more insights into VAT and business tax generally, be sure to check out our Resources page.