Since the full rollout of Making Tax Digital (MTD) for VAT in April 2022, all VAT-registered businesses in the UK are legally required to maintain digital records and file VAT returns using compatible software. However, when it comes to the payment itself, businesses still have a choice in how they pay VAT online.
Paying online is fast, secure, and helps avoid late penalties — and with the right method, you can streamline your business’s tax obligations effortlessly.
Summary
“This article outlines the most up-to-date methods to pay VAT online to HMRC and avoid penalties in 2025.”
Why Pay VAT Online in 2025?
Paying VAT online provides convenience, traceability, and peace of mind. HMRC encourages digital payments to ensure prompt, secure transactions, and reduced paperwork.
In 2025, with all VAT submissions now managed under MTD regulations, understanding your payment options has never been more critical.
Summary
“Online VAT payment ensures compliance, reduces paperwork, and meets MTD standards in 2025.”
Methods to Pay VAT Online to HMRC (2025)
1. Direct Debit (Recommended for Regular Payments)
Setting up a Direct Debit with HMRC is one of the most convenient ways to pay VAT online. Once authorised, HMRC will automatically collect the VAT amount from your business bank account three working days after the deadline. If this is your first time using Direct Debit, you must set it up at least three working days before submitting your VAT return.
However, if your business makes quarterly VAT returns and pays over £2.3 million annually, you are categorised under the payments on account regime, and Direct Debit will not be an eligible method.
Summary
“Direct Debit is a reliable option for small to medium businesses to pay VAT online.”
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VAT Deregistration: A Complete Guide
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2. Debit or Corporate Credit Card via HMRC BillPay
HMRC allows payments via debit or corporate credit card (not personal credit cards) using its secure online portal. Note that corporate cards incur a non-refundable transaction fee, whereas debit cards usually do not. Payments via card take up to 3 working days to reflect.
Summary
“Debit and corporate credit cards are simple but may incur fees and delay of up to 3 days.”
3. Faster Payments Through Online or Mobile Banking
If you’re close to your VAT payment deadline, Faster Payments via your online or mobile banking are ideal. These payments usually arrive same day or next day, including weekends and bank holidays.
Simply log in to your bank, choose ‘HMRC VAT’ as the payee, and input your 9-digit VAT registration number as the payment reference.
Summary
“Faster Payments is the quickest and most flexible way to pay VAT online in urgent situations.”
4. BACS (Bankers’ Automated Clearing Services)
BACS payments typically take 3 working days to reach HMRC. It’s a good option for non-urgent payments. However, check your bank’s processing time and cut-off hours (usually between 7am and 10:30pm) to avoid unexpected delays.
Summary
“Use BACS for non-urgent payments, but allow 3 days for processing.”
5. CHAPS (Clearing House Automated Payment System)
CHAPS is ideal for high-value, time-sensitive transactions, ensuring same-day transfers if processed by 5:40pm. However, most banks charge between £20–£30 per CHAPS payment, so it’s best reserved for large or last-minute transactions.
Summary
“CHAPS ensures same-day payment but comes with higher transaction fees.”
What You Need to Pay VAT Online
To pay VAT online in 2025, you’ll need:
- Your 9-digit VAT registration number (no spaces)
- The correct HMRC bank details
For payments within the UK (Faster Payments, BACS or CHAPS):
- Sort code: 08-32-00
- Account number: 11963155
- Account name: HMRC VAT
Bank address: Barclays Bank PLC
1 Churchill Place
London, E14 5HP
For international payments:
- IBAN: GB36BARC20051773152391
- BIC: BARCGB22
- Account name: HMRC VAT
Summary
“Accurate VAT reference and banking details are crucial to successful online VAT payments.”
Transfer Times for Online VAT Payments (2025)
| Payment Method | Transfer Time |
| Direct Debit | 3 working days |
| Debit/Corporate Credit Card | 3 working days |
| BACS | 3 working days |
| CHAPS | Same working day (before 5:40pm) |
| Faster Payments | Same or next day |
Final Checks Before You Pay VAT Online
Before you hit send on your payment:
- Double-check your VAT registration number as your payment reference
- Verify your bank’s transaction limits and cut-off times
- Allow sufficient time for your chosen payment method
- Check your VAT account within 48 hours to confirm payment receipt
Summary
“Ensure your payment reference, limit, and timing are accurate to avoid penalties.”
Late Payment Penalties in 2025
If HMRC doesn’t receive full payment by the VAT deadline, your business enters a 12-month ‘surcharge period’. The first late payment isn’t fined, but repeated defaults escalate penalties based on your business’s turnover.
| Defaults in 12 Months | Turnover < £150,000 | Turnover ≥ £150,000 |
| 2nd | No surcharge | 2% (min £400) |
| 3rd | 2% (min £400) | 5% (min £400) |
| 4th | 5% | 10% or £30 |
| 5th | 10% or £30 | 15% or £30 |
| 6th or more | 15% or £30 | 15% or £30 |
Summary
“Avoid recurring defaults to protect your business from VAT surcharge penalties.”
- Penalty Reference: HMRC VAT Surcharge Guidelines
Best Practices to Pay VAT Online in 2025
- Set reminders for VAT payment deadlines
- Use MTD-compliant software to file returns
- Choose low-fee payment methods (e.g., Faster Payments)
- Check payment status on HMRC VAT account regularly
- Opt for Direct Debit if your business qualifies
Summary
“Adopting best practices ensures hassle-free VAT compliance throughout 2025.”
Final Thoughts
Understanding how to pay VAT online is a crucial part of running a compliant business in the UK. Whether you’re using Direct Debit, BACS, CHAPS, or Faster Payments, the key is planning ahead and following HMRC’s official procedures.
Make sure your MTD obligations are up to date, your VAT registration number is correctly referenced, and you choose the most efficient and cost-effective payment method.
Summary
“Pay VAT online with confidence by choosing the right method and verifying every detail.”
The content provided on TaxCalculatorsUK, including our blog and articles, is for general informational purposes only and does not constitute financial, accounting, or legal advice.
You can also visit HMRC’s official website for more in-depth information about the topic.
