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VAT in Sage Accounting

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Summary

An overview of VAT, common VAT schemes and the VAT return in Sage Accounting.

Description

What is VAT?

VAT is a tax on most goods and services provided by VAT-registered businesses. If your company is registered for VAT, you must charge the right VAT rate on your products and services.

Making Tax Digital (MTD)

Under the MTD for VAT rules, affected businesses need to:

  • Ensure you have MTD for VAT-compliant software
  • Start maintaining digital business records
  • Sign up with HMRC for MTD for VAT
  • Authorise the connection between your chosen software and HMRC
  • Start submitting your VAT returns through compliant software

Learn how to Get set up for Making Tax Digital (MTD).

VAT schemes

Depending on your business, there are different VAT schemes that you can use. HMRC or your accountant can help you decide which VAT scheme is best for you.

VAT Schemes Description 
Standard VAT You reclaim VAT upon receiving invoices from suppliers and are liable for VAT on sales upon invoicing customers.
Cash AccountingYou reclaim VAT on purchases when you pay your supplier, and you owe VAT on sales when your customer pays you.
Flate Rate - Invoice Based This VAT scheme calculates as a percentage of your total turnover, and you owe VAT on sales when you send an invoice to your customer.
Flate Rate - Cash BasedIn this VAT scheme, you calculate VAT as a percentage of your total turnover and owe VAT on sales when your customer pays you.
Not Registered If your company isn't VAT registered, specify this in Accounting.

Find out more about how to Set up VAT.

VAT rates

In Accounting, there are five pre-set VAT rates to choose from. Find out more about how to Understand VAT rates.

The VAT return

If you're a VAT-registered business in the UK, you need to calculate and submit your VAT return to HMRC.

Find out more about how to Create and submit a VAT return.