VAT Return Calculator UK 2025 | Quarterly Returns
Work out exactly how much VAT you owe HMRC — or are owed back — for any quarterly period. Supports the standard accounting scheme, the flat rate scheme, and the cash accounting scheme.
VAT Return Calculator
What Is a VAT Return?
A VAT return is a form you submit to HMRC every quarter — or sometimes monthly or annually — showing the total VAT your business charged on sales (output tax) and the total VAT you paid on purchases (input tax). The difference is what you either pay to HMRC or reclaim from them.
For the 2025/26 tax year, the VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. Once you cross that threshold you have 30 days to register and a further 30 days before you must start charging VAT. You can also register voluntarily below the threshold — useful if you buy a lot of VAT-rated goods and want to reclaim input tax.
Quarterly VAT Filing Deadlines 2025/26
Most VAT-registered businesses file quarterly. The standard stagger groups and their deadlines are:
| Quarter End | Filing & Payment Deadline | Stagger Group |
|---|---|---|
| 31 January | 7 March | Group 1 (Jan/Apr/Jul/Oct) |
| 30 April | 7 June | Group 1 |
| 31 July | 7 September | Group 1 |
| 31 October | 7 December | Group 1 |
| 28/29 February | 7 April | Group 2 (Feb/May/Aug/Nov) |
| 31 May | 7 July | Group 2 |
| 31 August | 7 October | Group 2 |
| 30 November | 7 January | Group 2 |
| 31 March | 7 May | Group 3 (Mar/Jun/Sep/Dec) |
| 30 June | 7 August | Group 3 |
| 30 September | 7 November | Group 3 |
| 31 December | 7 February | Group 3 |
If you pay by Direct Debit, HMRC collects payment three working days after the deadline, giving you a few extra days of float.
Standard VAT Accounting: How It Works
Under standard accounting you record VAT when invoices are raised, regardless of whether you've been paid. At the end of each quarter you total up:
- Box 1 – VAT due on sales: All output VAT charged on your VAT invoices.
- Box 4 – VAT reclaimed on purchases: All input VAT on your supplier invoices (you must hold valid VAT receipts).
- Box 5 – Net VAT payable/reclaimable: Box 1 minus Box 4.
Worked Example — Standard Scheme
A marketing agency has the following figures for the quarter to 31 January 2026:
- Net sales: £100,000 → Output VAT at 20% = £20,000 (Box 1)
- Net purchases (software, rent, freelancers): £40,000 → Input VAT at 20% = £8,000 (Box 4)
- VAT payable to HMRC (Box 5): £20,000 − £8,000 = £12,000
The agency must pay £12,000 by 7 March 2026.
Flat Rate Scheme (FRS)
The FRS simplifies bookkeeping. Instead of tracking every invoice, you pay HMRC a fixed percentage of your gross (VAT-inclusive) turnover. You still charge customers 20% VAT, but you keep the difference between that and your flat rate percentage — or pay more if you're a limited cost trader.
FRS Flat Rate Percentages (2025/26)
| Trade Sector | Flat Rate % |
|---|---|
| Limited cost trader (any sector) | 16.5% |
| IT & computer services | 14.5% |
| Management consultancy | 14% |
| Accountancy / bookkeeping | 13% |
| Solicitors / lawyers | 14.5% |
| Catering (not take-away food) | 12.5% |
| Retailing (food, confectionery) | 4% |
| Farming / agriculture | 6.5% |
| Manufacturing food | 8.5% |
| Travel agency | 10.5% |
| Pubs | 6.5% |
| Hairdressing / beauty | 13% |
Limited Cost Trader — The 16.5% Rule
A limited cost trader is any FRS business whose VAT-inclusive spend on goods is either less than 2% of their VAT-inclusive turnover or less than £1,000 a year. Services such as accountancy fees, fuel, and staff costs do not count as goods. If you spend very little on goods — typical of consultants, coaches, and digital freelancers — you are a limited cost trader and must use 16.5%.
FRS Worked Example
A graphic designer (management consultancy rate: 14%) invoices £50,000 net in a quarter.
- VAT charged to clients (20%): £10,000 → Gross turnover = £60,000
- FRS payment: £60,000 × 14% = £8,400 to HMRC
- Designer keeps: £10,000 − £8,400 = £1,600 saving
If they were a limited cost trader at 16.5%: £60,000 × 16.5% = £9,900 — they would pay £900 more than the VAT they charged, turning the FRS into a disadvantage.
Cash Accounting Scheme
Under cash accounting you pay VAT when you receive payment from customers (not when you invoice) and reclaim VAT when you pay your suppliers. This can significantly improve cash flow for businesses with slow-paying customers. To join you must have a taxable turnover of £1.35 million or less. You must leave the scheme if turnover exceeds £1.6 million.
Key benefit: If a customer never pays you, you never hand over the VAT on that sale — automatic bad debt relief.
Key drawback: You can only reclaim input VAT once you've actually paid your supplier, so if you take long credit terms you wait longer to reclaim.
Annual Accounting Scheme
Instead of filing four VAT returns a year, the Annual Accounting Scheme requires just one. You make nine interim payments (based on the prior year's VAT liability) during the year and file a single balancing return within two months of your year end. To join, taxable turnover must be £1.35 million or less. This reduces administrative burden but you must make advance payments even when business is slow.
Making Tax Digital (MTD) for VAT
Since 1 November 2022, all VAT-registered businesses — including those below the £90,000 threshold who register voluntarily — must follow MTD for VAT rules:
- Keep digital records of all VAT transactions.
- Submit VAT returns directly from MTD-compatible software (not via the old HMRC online portal).
- Use digital links between software — no re-keying figures from spreadsheets unless bridging software is used.
Popular MTD-compatible software includes QuickBooks, Xero, Sage, FreeAgent, and HMRC's own free bridging tool for simple businesses.
How to Submit Your VAT Return
- Log into your Government Gateway account or MTD-compatible software.
- Review the nine boxes of your VAT return — especially Box 1 (output tax), Box 4 (input tax), Box 5 (net amount due), Box 6 (net sales), and Box 7 (net purchases).
- Submit electronically before the deadline.
- Pay by Direct Debit, bank transfer (Faster Payments / CHAPS / BACS), or online banking using HMRC's bank details and your VAT registration number as the reference.
Common VAT Return Mistakes to Avoid
- Claiming VAT on entertainment: Business entertainment is blocked — you cannot reclaim input tax on client dinners, event tickets, or hospitality.
- Cars: Input VAT on car purchases is blocked unless the car is used 100% for business (virtually impossible for sole traders).
- No VAT receipt: You can only reclaim input VAT if you hold a valid VAT invoice. Receipts without a VAT number are not sufficient for amounts over £250.
- Mixed-use assets: Only the business proportion of input VAT is reclaimable (partial exemption rules apply).
- Missing the deadline: A single default triggers a 12-month surcharge period. Further defaults attract surcharges of 2%, 5%, 10%, or 15% of the outstanding VAT.
Correcting VAT Errors
If you discover an error in a previous VAT return, HMRC's policy depends on the size of the error:
- Net errors up to £10,000 (or errors up to 1% of Box 6 turnover if that is higher, subject to a cap of £50,000): Correct on your next VAT return by adjusting Box 1 or Box 4.
- Errors over £10,000 (or above the 1% cap): You must tell HMRC separately by completing form VAT652 or writing to them. You can also use VAT652 for errors you'd prefer to disclose separately.
- Deliberately withheld VAT: HMRC can charge a penalty of up to 100% of the under-declared tax.
Frequently Asked Questions
When are the quarterly VAT return deadlines?
VAT returns are due one month and seven days after the end of your VAT quarter. For the most common stagger group (quarters ending January, April, July, October) the deadlines fall on 7 March, 7 June, 7 September, and 7 December respectively.
What is the VAT registration threshold for 2025/26?
The VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. This figure has been frozen since April 2024. If you exceed it you must register within 30 days and charge VAT from the start of the following month.
Can I reclaim VAT on a car purchase?
Input VAT on cars is blocked in almost all circumstances. You can only reclaim it if the car is used exclusively for business purposes and there is no private use whatsoever — a very high bar that HMRC will challenge. VAT on commercial vehicles (vans, lorries, pick-ups) is generally fully reclaimable.
What is the difference between zero-rated and exempt supplies?
Zero-rated supplies (food, children's clothing, books, most exported goods) carry a 0% VAT rate but are still VATable — you can reclaim input VAT associated with making them. Exempt supplies (insurance, finance, health, education) fall outside the VAT system entirely — you cannot reclaim input VAT on costs that relate solely to making exempt supplies.
Is the flat rate scheme worth it in 2025/26?
The FRS is worth it if your input VAT is consistently low relative to your output VAT. For a management consultant on 14% FRS: they charge 20% and pay 14%, keeping 6% of gross turnover as a tax saving. However, limited cost traders (most service businesses with few goods costs) must use 16.5%, which typically makes the FRS less advantageous than standard accounting. Use our calculator above to compare.
What is Making Tax Digital for VAT and does it apply to me?
MTD for VAT requires VAT-registered businesses to keep digital records and submit VAT returns via MTD-compatible software. Since November 2022, MTD applies to ALL VAT-registered businesses, including voluntary registrations below the £90,000 threshold. You must use compatible software such as QuickBooks, Xero, Sage, or FreeAgent — or a spreadsheet with approved bridging software.
What happens if I submit my VAT return late?
From January 2023, HMRC uses a new points-based penalty system. Each late submission earns one point. Once you reach the threshold for your filing frequency (4 points for quarterly filers, 2 for annual), a £200 penalty is charged. Further late submissions add another £200 each. Late payment interest accrues at Bank of England base rate plus 2.5 percentage points from the day after the due date.