In order to budget effectively for your VAT payments, you’ll need to know what you owe – and to stay on top of any changes to tax rates too. Liberis Finance Director, Tom Bason, says:
“In terms of planning ahead, definitely make sure to stay on top of any changes to tax, and the correct tax legislation that applies to you and your business. Make sure you’re on the right VAT scheme and whether that be a flat rate VAT scheme too. The HRMC site is best for keeping up to date with this, and speaking with your accountant on a regular basis.”
Usually, the amount of VAT you owe HRMC will be the difference between your sales and purchase invoices. However, depending on your business, you may be on the Flat Rate Scheme, or the Cash Accounting Scheme, in which case you’ll need to calculate what you owe slightly differently.