How to pay a VAT bill: deadlines, payment methods and what late payment costs

You must pay a VAT bill by the deadline shown on your VAT return, which is usually one calendar month and 7 days after the end of the accounting period. That is also the deadline for submitting the return online, so the return and the VAT payment normally fall due together.

As a worked date, a VAT period that ends on 31 March usually has a deadline of 7 May. The payment has to reach HMRC’s account by the deadline, so a transfer sent on the day by a slow method is late.

Filing and paying are two separate duties. Sending the return does not pay the bill, and paying does not file the return. Businesses on the Annual Accounting Scheme or on VAT payments on account have different dates, covered below.

You can pay VAT online by approving a payment through your online bank account or by card, both of which are usually instant, or by Direct Debit or bank transfer, which take up to 3 working days. The table shows what HMRC’s guidance says about each.

There is no fee for paying with a personal debit card. HMRC’s bank details are on GOV.UK’s “Pay your VAT bill” pages, listed in the sources below.

You use your 9-digit VAT registration number, without spaces, as the payment reference. It is the same number every time, which is one way VAT differs from Corporation Tax, where the reference changes each accounting period.

If you run a limited company, the two bills also have different deadlines and different rules on late payment. Our guide on how to pay Corporation Tax sets those out.

With a VAT Direct Debit, HMRC collects the amount on your return automatically, 3 working days after the payment deadline shown on that return. It removes the risk of forgetting, but it has limits you should know before relying on it.

• Set the Direct Debit up at least 3 working days before you submit your VAT return.
• If you file the return late, the payment is taken 3 days after you file.
• It cannot be used for a payment of more than £20 million, or by a business on VAT payments on account.
• It does not collect VAT surcharges or penalties, so those have to be paid another way.

Because the collection follows the return, the money needs to be in the account in the days after the deadline, not only on it.

Businesses on the Annual Accounting Scheme and businesses that must make VAT payments on account have their own payment dates, so the usual one month and 7 days does not apply to them in the same way.

Payments on account are required where a business sends quarterly returns and owes more than £2.3 million in any period of 12 months or less. The rules are tighter than the standard ones:

• Interim payments are due on the last working day of the second and third months of each VAT quarter.
• Each interim payment is one twenty-fourth of the annual VAT liability.
• The 7-day extension for paying electronically does not apply.
• Direct Debit is not available.

If you are on the Annual Accounting Scheme, check your own dates in your HMRC online account or with your accountant.

Check your HMRC online account after you have paid, and keep your bank’s confirmation until the payment shows against the right VAT period. The guidance we relied on gives how long each method takes to reach HMRC, set out in the table above, but not how quickly the account updates.

If a payment has not appeared when you expected it, check that the reference was your VAT registration number with no spaces, then contact HMRC with the date, amount and reference. Choosing a method with time to spare is the simplest protection.

Paying VAT late costs interest from the first day the payment is overdue, and penalties once it is more than 15 days overdue. HMRC’s late payment interest rate is 7.75% from 9 January 2026, set at the Bank of England base rate plus 4%, so it moves when the base rate does.

Those penalty rates have applied since 1 April 2025. Because the penalties are worked out on what is still owed at day 15 and day 30, paying part of the bill early reduces them, and reduces the balance that interest is charged on.

Sending the return late is penalised separately, under a points system. You get one point for each late return, including nil and repayment returns, and a £200 penalty when you reach the threshold: 4 points if you file quarterly, 5 if monthly and 2 if annually.

If you cannot pay in full, you may be able to set up a payment plan with HMRC, known as Time to Pay, and pay in instalments. HMRC checks that the plan is affordable, and there is no fixed time limit on how long it can last.

For VAT there is a specific reason to ask early. HMRC says that an agreed payment plan can mean lower, or no, late payment penalties, and that you can propose one at any point while the VAT is overdue. Interest still continues on the balance during the arrangement.

• File the return on time even if you cannot pay, so that HMRC knows what you owe and you avoid a late submission point.
• Pay what you can now, and work out a monthly figure from real cash-flow numbers.
• Have your VAT registration number, UK bank details for a Direct Debit and your income and spending details ready.

A company is expected to reduce the debt as much as it can first, and HMRC may ask directors to put in personal funds or accept lending. Our guide to how HMRC Time to Pay works covers the process step by step.

Yes, some business lenders offer short-term loans that pay the VAT by the deadline and are repaid in monthly instalments, subject to status and lender criteria. A loan adds interest and fees to a bill you already owe, so compare its total cost in pounds with what HMRC would charge under a payment plan.

Borrowing can make sense for a profitable business with a one-off squeeze. If you would need to borrow every quarter, the VAT bill is a symptom: the business is short of working capital, and that is the problem to fix. Our guide to VAT loans compares the loan, Time to Pay and paying from your own cash in detail.

Capzy is a credit broker, not a lender, and is paid by the lender. We do not collect VAT, arrange Time to Pay or give tax advice: paying the bill is between your business and HMRC.

If you want to know what borrowing would cost before you decide, you can check your funding options with a soft search that does not affect your credit score. A full application to a lender may involve a hard search, and any offer is subject to status and lender criteria. The other business finance guides explain the funding side in more detail.