How to File a VAT Return in the UK: Step by Step (MTD)

Quick answer: Here is how to file a VAT return in the UK: record sales and purchases in Making Tax Digital compatible software, check the figures for the nine boxes, and submit the return to HMRC from the software. The deadline is normally one calendar month and 7 days after the period ends, and payment is due by the same date.

Your first VAT return can feel intimidating, but the form itself is short: nine boxes, five for VAT and four for values. The work is in keeping clean records during the quarter. This guide covers how to file a VAT return step by step under Making Tax Digital (MTD), explains every box, works through a full example with numbers, and sets out the deadlines and penalties that apply in 2026. Figures here were checked against GOV.UK in October 2026.

Before you start: Making Tax Digital for VAT

Knowing how to file a VAT return starts with the software rule, because it decides which tools you can use.

Since April 2022 every VAT-registered business has been within Making Tax Digital for VAT, whatever its turnover, unless HMRC has granted an exemption. HMRC's guidance on sending a VAT Return says you must submit using software compatible with MTD. In practice that means one of:

• Accounting software that keeps your records and submits directly to HMRC.
• Bridging software that reads figures from a spreadsheet and sends them to HMRC.
• An agent, such as an accountant, using their own MTD software on your behalf.

MTD also requires digital records: your business name, address and VAT number, the VAT accounting scheme you use, and for each supply the date, value and rate of VAT. Figures must move between programs digitally. Copying totals by hand from one spreadsheet into another breaks the digital link. If you are also preparing for MTD on the income tax side, our guide to Making Tax Digital for Income Tax explains how the two regimes differ.

Not registered yet? Check the UK VAT registration threshold first. It is £90,000 of taxable turnover over a rolling 12 months.

The 9 boxes you complete when you file a VAT return

Box	What goes in it	Format
1	VAT due on sales and other outputs	Pounds and pence
2	VAT due on acquisitions of goods from the EU (Northern Ireland only)	Pounds and pence
3	Total VAT due: Box 1 plus Box 2	Pounds and pence
4	VAT reclaimed on purchases and other inputs	Pounds and pence
5	Net VAT to pay or reclaim: the difference between Box 3 and Box 4	Pounds and pence
6	Total value of sales and outputs, excluding VAT	Whole pounds
7	Total value of purchases and inputs, excluding VAT	Whole pounds
8	Supplies of goods to the EU (Northern Ireland only)	Whole pounds
9	Acquisitions of goods from the EU (Northern Ireland only)	Whole pounds

A few points that trip people up:

• Box 6 includes zero-rated and exempt sales as well as standard-rated ones. Our guide to zero-rated vs exempt VAT explains the difference, which matters for what you can reclaim.
• Under the reverse charge, for example on certain services bought from abroad, the VAT goes in both Box 1 and Box 4, and the value goes in Boxes 6 and 7. See our reverse charge invoice guide.
• Box 4 should only include VAT backed by a valid VAT invoice or other acceptable evidence.

How to file a VAT return: step by step

The steps below assume quarterly returns and accounting software. If you use bridging software with a spreadsheet, the order is the same; only the final submission screen differs.

1. Check your period and deadline. Sign in to your VAT online account to confirm the period dates and due date.
2. Record every sales invoice. Make sure each sale in the period is in your software with the correct date, net value and VAT rate. Issue proper invoices as you go; our VAT invoice guide lists what each one must show.
3. Record purchases and expenses. Enter supplier invoices and receipts, and only reclaim VAT you hold evidence for.
4. Account for credit notes. A credit note reduces the output VAT for the period in which it is issued.
5. Reconcile with the bank. Match payments in and out to invoices so nothing is missing or duplicated. Our bookkeeping basics article covers a simple routine.
6. Review the nine boxes. Compare Box 1 against your sales total multiplied by the rate, and look for unusual swings from last quarter.
7. Make any error corrections. Small past errors can often be adjusted on this return (see the FAQ below).
8. Submit from your MTD software. Authorize the software with your Government Gateway details if you have not already, then submit. Save the confirmation.
9. Pay by the deadline. Payment must be in HMRC's account by the due date. If you pay by Direct Debit, set the mandate up at least 3 working days before you submit the return; HMRC then collects automatically a few working days after the deadline.
10. Archive the records. Keep the return, workings, and invoices for at least 6 years.

Worked example: a quarterly return

Tom is a sole trader web designer registered for VAT, on standard quarterly returns. His quarter runs from 1 July to 30 September 2026. His records show:

• Standard-rated sales of £30,000 net, all at 20%.
• A zero-rated sale of printed books of £2,000 net.
• Purchases with VAT invoices: £7,250 net, VAT of £1,450.
• Other costs with no VAT, such as insurance: £800.

The boxes work out like this:

Box	Calculation	Figure
1	£30,000 × 20%	£6,000.00
2	No EU acquisitions	£0.00
3	£6,000.00 + £0.00	£6,000.00
4	VAT on purchase invoices	£1,450.00
5	£6,000.00 − £1,450.00	£4,550.00 to pay
6	£30,000 + £2,000	£32,000
7	£7,250 + £800	£8,050
8 and 9	Not applicable	£0

The deadline is one calendar month and 7 days after 30 September, which is 7 November 2026. Both the return and the £4,550 payment are due by then.

Suppose Tom files on time but pays 20 days late. Under the late payment rules HMRC applies from 2025, there is no penalty if tax is paid within 15 days. Because Tom's VAT was still outstanding at day 15 but paid before day 31, a first penalty of 3% of the day-15 balance applies: £4,550 × 3% = £136.50. Late payment interest is also charged from the day after the deadline. Paying on time would have avoided both.

VAT return deadlines and penalties in 2026

Late submission: penalty points

For periods starting on or after 1 January 2023, each late return earns one point. The GOV.UK penalty points guidance sets these thresholds:

Filing frequency	Penalty point threshold
Annual	2 points
Quarterly	4 points
Monthly	5 points

At the threshold you get a £200 penalty, plus another £200 for each later late return while you stay there. To reset the points you need to meet a period of compliance by filing on time and submitting all outstanding returns from the previous 24 months.

Late payment penalties and interest

• Up to day 15: no penalty, but interest runs.
• Day 16 to 30: first penalty of 3% of the VAT outstanding at day 15.
• Day 31 onward: first penalty of 3% of the amount at day 15 plus 3% of the amount still outstanding at day 30, and a second penalty charged daily at 10% a year until paid.

These rates replaced the earlier 2% and 4% figures in 2025, and HMRC's manual ties the new rates to the period and due date, so older periods may use the old rates. A Time to Pay arrangement agreed with HMRC can reduce or stop late payment penalties. Late payment interest is set at the Bank of England base rate plus a margin; check GOV.UK for the current figure.

Common mistakes

• Reclaiming VAT without a valid invoice. A card receipt without the supplier's VAT number may not be enough.
• Missing zero-rated and exempt sales in Box 6. Box 6 is total sales, not just standard-rated ones.
• Reclaiming VAT on non-business or blocked costs, such as most business entertainment.
• Using the wrong tax point. VAT is usually due by reference to the invoice date or payment date, depending on your scheme, not when you happen to enter it.
• Retyping figures between spreadsheets, which breaks the MTD digital link.
• Forgetting the reverse charge on services bought from overseas.
• Paying from a new bank account too close to the deadline. Allow time for the money to clear.
• Leaving everything to the last week. Anyone who has learned how to file a VAT return the hard way will tell you the submission takes minutes; finding missing invoices takes days. Record invoices weekly.

VAT return checklist

• MTD-compatible software set up and authorized
• All sales invoices and credit notes recorded with correct dates and rates
• Purchase invoices held for every VAT amount reclaimed
• Bank account reconciled for the period
• Reverse charge transactions entered in Boxes 1, 4, 6 and 7
• Box 5 checked against your expectation
• Return submitted and confirmation saved
• Payment made or Direct Debit in place before the due date
• Records stored for at least 6 years

Which VAT scheme are you on?

The boxes stay the same, but the figures you put in them depend on your accounting scheme:

• Standard accounting: VAT is due by reference to invoice dates, even if the customer has not paid.
• Cash accounting: VAT is accounted for when money is received or paid, which helps cash flow if customers pay slowly.
• Flat Rate Scheme: Box 1 is your VAT-inclusive turnover multiplied by your flat rate percentage, and you usually cannot reclaim input VAT except on certain capital purchases.
• Annual Accounting Scheme: one return a year, with interim payments during the year and a different deadline for the final return.

Check which scheme applies to your registration before you prepare the figures, because using the wrong basis is one of the quickest ways to get Box 1 wrong.

Good returns start with good invoices. Our free UK invoice generator creates VAT invoices in GBP as PDFs in your browser, showing your VAT number and the VAT separately. It does not connect to HMRC or file anything, so you still enter the figures into your MTD software. Sole traders who are not yet registered can read our guide to sole trader invoices in the UK, and for retention rules see how long to keep invoices.

This article is general information, not tax advice. VAT rules, deadlines and penalty rates change; check GOV.UK or speak to an accountant about your circumstances.