Official Statistics

Annual UK VAT statistics 2023 to 2024 background and references

Updated 3 December 2024

1. About this release

This official statistics publication provides information on VAT receipts, Home VAT and Import VAT. It includes Home VAT declared on traders’ returns classified by sector and trade group, VAT registrations, de-registrations and trader population. It also contains a historic series of annual and quarterly VAT receipts and VAT registrations and de-registrations.

2. VAT Annual Statistics Guidance

There are 3 main measures of tax revenue:

1. on an accruals basis (when the tax liability arose)
2. on a declared liability basis (when HMRC is notified of the liability)
3. on a cash receipts basis (when the tax was paid to HMRC)

2.1 Types of VAT reported and data sources

Total VAT

Total VAT receipts are equal to Home VAT receipts plus Import VAT receipts. From February 2021, Import VAT receipts are for Non-postponed accounting import VAT only. Home VAT is charged on the supply of goods or services in the UK. Prior to April 2015, total VAT receipts were calculated by subtracting other taxes from the Indirect Taxes Consolidated Fund total. The data source for Total VAT is HMRC bank account data, including accounting adjustments to remove penalties and occasional payment errors.

Home VAT net receipts

Net Home VAT receipts are equal to Home VAT payments made to HMRC by registered taxpayers minus Home VAT repayments made from HMRC to taxpayers. Taxpayers will make payment to HMRC when their net Home VAT liability is positive and will receive repayments when their net Home VAT liability is negative. Prior to April 2015, Home VAT net receipts were calculated by subtracting Import VAT receipts from Total VAT receipts.

Home VAT liability is defined as the output tax charged on sales (plus any reverse charges) minus the input tax paid on supplies.

To help manage cash flow during the Covid-19 pandemic, businesses were able to defer Home VAT payments due between 20 March 2020 and 30 June 2020. After June 2020, businesses could then either:

• pay in full by 31 March 2021
• join the online VAT deferral new payment scheme by 21 June 2021 to spread payments of deferred VAT over smaller, interest free instalments
• contact HMRC to make an arrangement to pay by 30 June 2021

This VAT payment deferment policy resulted in Home VAT receipts being lower than usual in 2020 to 2021. The economic impacts of Covid-19 and the temporary reduced rate of 5% for hospitality, holiday accommodation and attractions also reduced Home VAT receipts in 2020 to 2021.

Home VAT payments and repayments

The data source for Home VAT payments and repayments is HMRC bank account data. Prior to April 2015, Home VAT repayments were calculated by subtracting Home VAT payments from Home VAT receipts. This method attributed any unallocated residual from the Indirect Taxes Consolidated Fund to Home VAT repayments, which averaged approximately plus or minus £100 million each month.

Approximately 70% of taxpayers that regularly receive VAT repayments submit monthly returns. Most of the remaining 30% of VAT repayments are made to traders submitting quarterly returns. The VAT repayments time series also includes VAT refunds.

Import VAT receipts

Following the introduction of Postponed VAT Accounting (PVA) in January 2021, traders can now pay Import VAT as part of their VAT return, rather than via duty deferment accounts. PVA import VAT receipts cannot easily be separated out from the Home VAT receipts. Therefore, from February 2021 the Import VAT figures reported in this bulletin are for non-PVA Import VAT only. Note that January 2021 receipts reflect December 2020 returns which were on the previous regime.

Prior to January 2021, Import VAT was a transaction tax levied on imported goods from outside the fiscal (VAT) territory of the EU. From January 2021 imports from the EU are subject to Import VAT. The data source for Import VAT is the HMRC Customs and Excise Core Accounting System (CECAS).

Goods are treated as imported when they arrive in the UK directly and entered into free circulation in the UK, or when goods are removed from a customs suspense arrangements for free circulation in the UK. Go to Imports (VAT Notice 702) for more information.

Services supplied from outside the UK are not taxed under Import VAT but may be taxed under a Home VAT reverse charge. For more details see HMRC Public Notice 741A - Place of supply of services.

VAT returns

VAT returns can be reported on a monthly, quarterly or annual cycle. Most traders submit returns quarterly. By value around 95% of VAT Payments are made by traders submitting quarterly returns. Most of the remaining 5% of VAT Payments are received from traders submitting monthly returns.

Paper returns and cheque payments are due by the last working day of the month after the accounting period (for example, if the accounting period is January to March the return and payment is due by 30 April or if that is not a working day then the previous working day).

Online returns

Online returns and electronic payments (excluding Payment on Account) have a 7 calendar day extension, and an additional 3 working days for direct debit payments (for example, if the accounting period is January to March the return and payment is due by 7 May, and direct debits will be taken 3 working days after 7 May). For more information see VAT Returns - Deadlines.

The electronic payment extension does not apply to Payment on Account (POA) traders. By value nearly half of Home VAT payments are made by Payment on Account traders. For more details see HMRC Public Notice 700/60 - Payments on account.

Every VAT registered business with an annual VAT liability of more than £2.3 million and accounting for VAT using quarterly returns is required to make payments on account. Once in the POA scheme, each business must make interim payments at the end of the second and third months of each VAT quarter.

These interim payments are payments on account of the quarterly VAT liability. A balancing payment for the quarter, that is the quarterly liability less the payments on account made, is then made with the VAT return. For more details see HMRC Public Notice 700/60 - Payments on account.

2.2 VAT returns data

VAT Returns data is taken from HMRC administrative systems on which businesses’ VAT returns are recorded. Receipts data is not directly comparable with returns figures as it is not possible to match payments or repayments of VAT to a particular VAT return that has been submitted.

The net tax declared on VAT returns will not be the same as the payments and repayments made by a business, since net tax does not include:

• payments or repayments that are unrelated to the VAT return
• payments or repayments do not match the amount declared on the VAT return (for example where repayment is withheld by HMRC)

The net tax also relates to Home VAT only, as Import VAT is recorded on different systems from which we are unable to gather this data. For these reasons the net tax shown as coming from VAT returns data will not match up with Total VAT receipts published elsewhere.

All of the revenue figures published in these statistics and the VAT Bulletin are on a cash receipts basis (for example, April’s figure refers to cash received in April). VAT statistics on a declared liability basis are reported in these statistics for Home VAT. Calculated statistics on accruals are published in ONS/HMT Public Sector Finance publications.

The cash receipts published in these statistics and the VAT Bulletin relates to cash receipts paid into the Consolidated Fund. Bulletin figures differ from the audited accounts as published in the “HMRC Annual Report and Resource Accounts”.

The Annual Report figures relate to accrued revenue and differ from these statistics/Bulletin figures as a result of adjustments made to reflect all liabilities due and incurred up to 31 March of each year (and therefore do not only reflect movement of actual cash).

Data source is the VAT annual extract, which is a summary of VAT returns made throughout each financial year; all figures given refer to the live VAT population at financial year end or any trader who was not live at the year end, but submitted a non-nil return throughout the year.

Coverage

These statistics cover the United Kingdom. It is not possible to provide any regional breakdown on where tax liability arose for VAT as HMRC does not collect this data on the tax return.

The Office for National Statistics (ONS) has also published experimental statistics at country and regional levels as part of the ‘Country and regional public sector finances’, although this is on an accruals basis so will not align exactly with the Annual VAT Statistics.

The figures provided on VAT returns relate to the net tax declared by businesses on VAT returns that have been processed by HMRC. The source data on which it is based can be subject to revisions as a result of assessments or litigation and so these figures should be treated as provisional.

In addition this data is grouped by return date (the final month of the return period), whereas the other data sources will be based on date of receipt, and these will not be the same due to the rules governing when traders are required to submit their return.

VAT return boxes

Each VAT return box is recorded with its own abbreviated title in HMRC data. Further information on VAT boxes can be found on How to fill in and submit your VAT Return (VAT Notice 700/12)

Home VAT input tax and output tax

VAT returns are summed over the financial year to calculate total annual input tax and output tax amounts. Total input tax corresponds to Box 4 in a VAT return form, tax deductible (such as reclaimable as input tax) on goods/services purchased during the period (including on acquisitions from the EC and Import VAT).

Total output tax corresponds to Box 3 in a VAT return form, tax payable on goods/services sold during the fiscal year (Box 1) plus acquisitions from the EC (Box 2).

2.3 VAT trader data

The summary statistics in this publication, excluding those relating to VAT cash receipts, are based on a summary dataset – known as the VAT annual extract – used for analysis in HMRC.

This consistent dataset is created annually as a baseline for analysis; it is a summary of VAT returns level information and trader level information for the financial year. The data are compiled into a single table holding one record/trader for all traders.

For each VAT registered entity there is relevant VAT information covering the unique VAT registration number, the relevant trade sector for that entity, any VAT schemes the entity uses, trader status etc.

The trade groups that have been used are those described in the 2007 standard industrial classification of economic activities, details of which can be found on the Office for National Statistics website.

The trade groups are taken from businesses’ entries on HMRC systems. They will relate to the main economic activity of that business, even though each business could perform a range of activities. This classification should therefore not be taken as a precise indication of the economic activity in each group.

2.4 VAT population

The data source for new registrations and deregistrations is administrative data from the VAT mainframe, a central database held by HMRC which contains live information on the VAT population.

The live trader population is calculated as the previous month’s live trader population plus this month’s new registrations minus this month’s deregistrations.

Population figures from the VAT annual extract dataset in this factsheet refer to the live trader population during the year; those VAT registered traders active at 31 March of the fiscal year or who had submitted a non-nil return through the year.

Traders are recorded as not live if they are recorded as a missing trader before the end of the fiscal year. If this information is not available it is because the trader has deregistered before the end of the fiscal year.

This is in contrast to previous versions of these statistics where only traders live at the end of the financial year were included in the analysis.

2.5 Registered traders

Businesses need to register for VAT when their turnover of VAT taxable goods and services is over the VAT registration threshold; businesses below the VAT registration threshold may also choose to voluntarily register.

The Department for Business and Trade (DBT) publishes Business Population Estimates, which provides information on the total number of private sector businesses. Further information is provided on the employment and turnover in these businesses.

The data source for new registrations and de-registrations is administrative data from the VAT mainframe. The VAT mainframe is a central database held by HMRC which contains live information on the VAT population. The live trader population is calculated as the previous month’s live trader population plus any new registrations and minus any new de-registrations.

The ONS publishes Business Demography, UK Statistical bulletins, which contains data on births, deaths and survival rates of businesses.

The VAT registration data the ONS uses in the BUsiness Demography publication will not match HMRC VAT registrations data. The ONS data includes PAYE-registered enterprises and excludes some businesses that would be recorded separately in HMRC data.

Further adjustments are also made to the ONS series to better reflect business start-ups and closures and so indicates the number of businesses that are actually trading at any one time. The HMRC series is a reflection of occurrences of the VAT registration and deregistration process.

2.6 VAT turnover

Turnover here refers to the annual turnover declared on traders’ returns, excluding VAT (absolute turnover figures are used, hence for traders only registered for part of the year their returns are not scaled and values will only cover part of the year). This is taken to correspond to the financial year equivalent of Box 6 of the VAT Return (includes supplies to other EC member states from Northern Ireland from 1 January 2021).

Businesses below the VAT registration threshold limit are those that have voluntarily registered or registered traders whose turnover has not gone below the VAT deregistration threshold. Businesses may be able to voluntarily register for VAT with the same responsibilities as those who must register.

Registering may be beneficial, allowing a business to charge VAT on sales and claim back VAT on purchases. This would be advantageous for businesses if for example they sell to other VAT registered businesses, and also if they sell zero-rated goods or no goods and buy standard-rated goods they are normally able to claim back a VAT refund from HMRC.

3. VAT Annual Statistics methodology

3.1 Statistical quality

HMRC’s statement on statistical quality is published in HMRC: Official Statistics.

These statistics are based on administrative data sources and undergo a thorough internal quality-assurance procedure before publication. The ‘VAT annual and quarterly receipts’ statistics are aligned with HMRC’s Trust Statement, which is audited by the National Audit Office.

In order to ensure that we are fully complying with the National Statistics Code of Practice and our obligations under Section 18 of the Commissioners for Revenue and Customs Act 2005 (CRCA, which makes it clear HMRC must not disclose taxpayer information to anyone, unless there is lawful authority to do so), we have reviewed the outputs in this table.

As a result, we have suppressed some values. Where this suppression has occurred, we have indicated this with a ‘SUPP’.

3.2 Rounding policy

Cash receipts are rounded to the nearest million pounds. Financial figures sourced from the VAT Annual Extract are rounded to the nearest £10m. The number of traders has been rounded to the nearest 10.

Other quantities such as trader population are not rounded. Any inconsistency between the totals and their constituent parts, or any inconsistency between the text and the tables, is due to the totals and commentary being calculated using unrounded data.

Please see below definitions of symbols used in the data tables:

• ‘[x]’ indicates no information or data not available
• 0 may be used to refer to amounts greater than zero but not rounding to 1

3.3 Revisions policy

Any receipts data that has been revised will be marked with ‘[Revised]’ and an explanation provided as appropriate.

4. VAT Annual Statistics guidance

4.1 VAT total theoretical tax liability (VTTL), VAT receipts and VAT gap

The VAT gap is measured by comparing the net VTTL with actual receipts.

The difference between these amounts is known as the VAT gap. The VAT gap methodology uses a ‘top-down’ approach which involves:

1. gathering data detailing the total amount of expenditure in the economy that is subject to VAT, primarily national accounts data from the ONS 2. applying the rate of VAT on the ONS expenditure base on commodity breakdowns to derive the gross VTTL 3. subtracting any legitimate refunds occurring through schemes and reliefs to arrive at the net VTTL 4. subtracting actual receipts from the net VTTL leaving the residual element - the VAT gap

A detailed description of the methodology and latest estimate at the time of publication can be found in ‘Measuring tax gaps 2024 edition’.

Net VTTL is an estimate of both declared and undeclared VAT liabilities. The VAT liabilities published in the VAT Annual Statistics include only declared VAT liabilities. Therefore, the VAT liabilities in the VAT Annual Statistics will be lower than the net VTTL. The data sources for Net VTTL and the VAT liabilities in the VAT Annual Statistics also differ.

4.2 Structural reliefs

The estimated costs of tax expenditures and structural reliefs, and the illustrative effects of tax changes, can be found on the GOV.UK website.

4.3 Revenue effects of Budget measures

The estimated effects of Budget policy decisions for the latest year can be found on the GOV.UK website.

5. Contacts

For general enquiries about VAT please go to VAT: detailed information or contact the VAT Helpline on 0300 200 3700.

6. Publication calendar

We aim to publish the Value Added Tax (VAT) Statistics annually. This release, covering data up to 2023 to 2024, was published on 06 November 2024 at 9:30am. The next release, covering 2024 to 2025 will be published winter 2025.

Before December 2018, the publication was formerly called ‘VAT Factsheet’ and was published at the archived UK Trade Info website, which can be accessed via The National Archives.

7. User engagement

A consultation on the reduction and consolidation of HMRC statistics publications was held between 24 October 2022 and 16 January 2023 and the results have been published.

HMRC are committed to improving the official statistics we publish. We want to encourage and promote user engagement, so we can improve our statistical outputs.

We would welcome any feedback and suggestions you may have relating to the Annual VAT Statistics.

E-mail: [email protected]

8. Related statistics

National statistics for cash receipts for all HMRC administered taxes are published in HM Revenue and Customs receipts.

HMRC publishes a Tax Gap for VAT. Official statistics on Tax Gaps are published in Measuring Tax Gaps.

The estimated costs of tax expenditures and structural reliefs, and the illustrative effects of tax changes are published in Tax expenditures and ready reckoners.

The ONS and HM Treasury publish Public Sector Finances, which covers tax receipts from all taxes on the ONS website.

VAT receipts are forecast by the independent Office for Budget Responsibility (OBR) and published on the OBR website.