VAT annual accounting scheme calculator, 2026/27
For small companies using the VAT annual accounting scheme to smooth cash flow, this calculator estimates your interim payments on account for 2026/27 based on your prior year's VAT liability, and the balancing payment due with your single annual return.
The vat annual accounting scheme calculator runs on the rates and thresholds HMRC has published for the 2026/27 tax year, so the figures you see reflect the position your company is actually filing on rather than a historic set of bands. Change any input and the result recalculates immediately, with no sign-up and nothing sent anywhere.
If you are a director of a UK limited company, use it as a first look before a decision rather than as the decision itself. Interim payments on account are set at 90% of your previous year's VAT liability, split into either 9 monthly instalments or 3 quarterly instalments, with the balance due (or refunded) alongside a single annual VAT return. Real company positions bring in other income, reliefs, group structures and prior year adjustments that a single page of inputs cannot see, which is why the workings are written out below under vat. Read those, then check the numbers against your own accounts, and speak to us if anything looks materially different from what you expected.
Last reviewed 12 September 2026 for the 2026/27 tax year. Reviewed by Waqas Sagar, Member of ICAEW, Fellow of ACCA, Fellow of AAT.
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Result, 2026/27
Monthly payment on account
Total interim payments over the year
Balancing payment (or refund) with annual return
Extra amount dueActual VAT liability for the year
Illustration only, figures are based on the rates you have selected and the information entered. Please check your own position with us before acting.
Estimates for the 2026/27 tax year using published GOV.UK rates. Switch between 2026/27 and 2025/26 above.
How this is calculated
Under the annual accounting scheme, HMRC calculates your interim payments on account as 90% of your estimated total VAT liability for the year, generally based on your previous year's VAT return figures, spread across either 9 monthly payments or 3 quarterly payments, whichever you choose when joining.
You submit just one VAT return for the whole year, two months after the year end, at which point you pay any balancing amount if your actual liability was higher than your interim payments, or claim a refund if it was lower.
This calculator applies that 90% rule to your estimated liability to show the size of each interim payment, then compares it against an actual liability figure you provide to estimate the balancing payment or refund.
Why businesses choose annual accounting
The scheme reduces administration from four VAT returns a year to one, and spreads VAT payments evenly across the year through fixed instalments, which can make cash flow more predictable for businesses with variable quarterly income.
It suits stable or growing businesses whose VAT liability does not fluctuate wildly, since interim payments are based on the prior year and a rapidly changing business may face a large balancing payment or a series of overpayments that tie up cash unnecessarily.
Eligibility and leaving the scheme
You can join if your estimated VAT-taxable turnover for the next 12 months is £1,350,000 or less, and you must leave if your turnover exceeds £1,600,000, or if you become insolvent or stop being eligible for other reasons set out by HMRC.
You can also apply to lower your interim payments during the year if you reasonably expect your VAT liability to fall significantly, rather than waiting for the year end refund, subject to HMRC agreement.
What this means for your company
Treat the result as a planning figure for the 2026/27 tax year. If it changes what you were about to do, take a director's salary, a dividend, a large asset purchase or a filing decision, check it against your own accounts first. We can review the position with you and confirm the tax treatment before you commit.
Frequently asked questions
How are annual accounting scheme payments on account worked out?
HMRC bases interim payments on 90% of your previous year's VAT liability, split into either 9 equal monthly payments or 3 equal quarterly payments, depending on which option you chose when you joined the scheme.
What happens if my VAT liability changes a lot during the year?
You still pay the fixed interim amounts based on the prior year, with the difference settled through a balancing payment or refund alongside your annual VAT return. You can ask HMRC to adjust your payments during the year if your liability is expected to change significantly.
Can I still recover VAT on purchases under annual accounting?
Yes, annual accounting only changes how often you file and pay VAT, not how VAT is calculated. You calculate output and input VAT for the full year exactly as normal on your single annual return.
What turnover limits apply to the annual accounting scheme?
You can join if your estimated taxable turnover for the next 12 months is £1,350,000 or less, and you must leave the scheme once your turnover exceeds £1,600,000.
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