How to pay your VAT bill to HMRC

How do you pay a VAT bill to HMRC?

You pay your VAT bill by the deadline shown on your VAT return. The money must reach HMRC's bank account by that date, so the method you pick decides how early you must start. The five routes are Direct Debit, online banking or card, a bank transfer, a standing order (only for some schemes), and cash or cheque at your bank.

Whichever you use, the reference is your 9-digit VAT registration number with no spaces. The steps below follow GOV.UK: Pay your VAT bill. Use the VAT payment deadline calculator to work out how much time to allow.

Your VAT payment reference

Use your 9-digit VAT registration number, with no spaces between the digits. You can find it in your VAT online account and on your VAT registration certificate.

A VAT surcharge or penalty has a different reference: the 14-character number that starts with X, shown on the letter HMRC sent you about it.

A wrong reference can delay your payment or send it to a different tax bill you owe. If that happens, ask VAT general enquiries to move the payment.

HMRC bank details for VAT

These are the details GOV.UK publishes for paying VAT by Faster Payments, CHAPS or Bacs from a UK bank account:

Paying from an overseas account? You can pay by CHAPS, in sterling, to IBAN GB36 BARC 2005 1773 1523 91 (BIC BARCGB22), account name HMRC VAT.

Check these against the current GOV.UK page before every large payment. Scammers send emails and texts with fake HMRC bank details. Never change the payee because of a message you were sent.

Payment methods and how long each takes

For a cheque, make it payable to "HM Revenue and Customs only" and write your 9-digit VAT registration number on the back. To order slips, email HMRC's Electronic Payment Team with your VAT number. The address is on the GOV.UK page above.

Card payments suit smaller bills only. If you cannot pay in full by card, GOV.UK says to use another method such as a bank transfer.

Paying VAT by Direct Debit

Direct Debit is the safest way to avoid a forgotten payment. You set it up once in your VAT online account.

1. Set up the Direct Debit at least 3 working days before you submit your VAT return. If you miss that window, HMRC will not collect the first payment and you must pay another way.
2. Submit your return on time.
3. HMRC collects the payment automatically 3 working days after the payment deadline on your return.

If you file your return late, the payment is taken 3 days after you file.

You cannot use Direct Debit if you:

• pay from an overseas bank account
• have a VAT payments on account arrangement
• are approved to send paper VAT returns
• are an insolvency practitioner

You also cannot use it for a VAT surcharge or penalty, or for a payment over £20 million. If you have not used the Direct Debit for 2 years or more, check with your bank that it is still set up.

Direct Debit only takes money. HMRC does not use your Direct Debit account for VAT repayments. To receive a repayment into your bank account, update your registration details in your VAT online account. Otherwise HMRC sends a cheque.

VAT payments on account

Payments on account are advance payments towards your VAT bill. HMRC tells you to make them if you send quarterly VAT returns and owe more than £2.3 million in any period of 12 months or less. Most small businesses never meet this rule.

• HMRC works out each instalment by dividing your annual VAT liability by 24.
• Instalments are due on the last working day of the second and third months of every VAT quarter. The 7-day extension for electronic payment does not apply.
• The balance is due with your VAT return. Pay the net amount shown on the return, minus the instalments already paid. Do not change the figures on the return.
• You cannot pay instalments by Direct Debit. Use an online bank payment, bank transfer, card, your bank or a standing order.

HMRC sends a payment schedule and you can see it in your VAT online account. Read GOV.UK: VAT payments on account for the thresholds, the annual cycle and the alternatives.

If you use the Annual Accounting Scheme instead, your payment dates differ again, so follow the schedule HMRC gives you. Our VAT payment dates guide covers the standard deadlines.

What happens if you pay VAT late?

From the first day a payment is overdue, HMRC charges late payment interest until you pay in full. Late payment penalties start later, and the sooner you pay, the lower the penalty:

On £15,000 of VAT paid 51 days late, GOV.UK's example comes to £986.30 in penalties, before interest. Late payment penalties do not apply to payments on account or Annual Accounting Scheme instalments, but a late balancing payment can be penalised, and interest still applies.

Cannot pay in full? Ask HMRC for a payment plan (Time to Pay) as early as you can. An arrangement made within the first 15 days can mean lower or no penalties. See our guides to VAT late payment penalties, Time to Pay and VAT late filing penalties. Filing and paying are penalised separately, so file on time even if the money is short. The official page is GOV.UK: late payment penalties for VAT.

Common mistakes that cause "missing" VAT payments

• Using the company number, an invoice number or the business name as the reference instead of the 9-digit VAT number.
• Adding spaces to the VAT number, or using the X penalty reference for an ordinary VAT bill.
• Relying on Bacs in the last few days before the deadline.
• Setting up Direct Debit after submitting the return, or inside the 3-working-day window.
• Paying a surcharge or penalty with the VAT number, or the VAT bill with the penalty reference.
• Using a personal credit card, which HMRC does not accept.

Keep proof of each payment, such as the bank statement line or card receipt. Our guide to submitting a VAT return and the VAT return deadlines guide cover the filing side.