How do I handle VAT in ExpensePlus?

Currently, if your charity is VAT registered, you will need to create VAT claims manually outside of ExpensePlus. You can use an Excel template as is provided by the online bank Anna which is free to use. Once prepared, submissions can be sent directly to HMRC at the click of a button.

COMING SOON: New VAT Functionality within ExpensePlus!

We will be adding VAT handling within ExpensePlus by the end of November 2023 - our development team are already working on this.

Once launched, the VAT functionality will enable you to code receipts and payments with a VAT rate and to provide the output needed to submit VAT returns to HMRC.

Initially, this will be via an MTD Bridge. This means that you will click download from within ExpensePlus, open the file in Excel and click submit using a free add-on that can be installed within Excel to send your submission directly to HMRC. An example of the add-on is Anna MTD Bridging software which is free for anyone to use.

Should we get VAT registered?

As a church or charity, you need to register for VAT if your VATable income is above £85,000.

If you haven't yet become VAT registered, it's worth seeking advice upfront, as VAT for charities can be very complicated. VAT is also a tax, so most churches try to ensure their VATable income remains below the £85,000 threshold so that they don't have to register for VAT.

Even with the new VAT functionality that is coming to ExpensePlus, you will need sufficient knowledge to correctly classify different transactions in regard to VAT. It's not as simple as adding a VAT amount - you will need to know which transactions to add this to, which are VAT Exempt, which has zero rate VAT etc.

Listed Places of Worship VAT Grant Scheme

If you are thinking of registering for VAT to be able to reclaim VAT on a building project and you are a church, then you should look at the listed places of worship grant scheme. This scheme allows churches to reclaim VAT as a grant without needing to register for VAT - enabling you to get all of the benefits of VAT relief without any of the costs or complications.

External Help with VAT Claims

For the churches and charities that are VAT registered, most get external help with completing VAT returns, as the rules for charities and VAT can be extremely complex, and incorrect submissions can lead to overpaying tax (or worse, a large bill and a fine for underpaying tax).

If you don't already have support, we'd highly recommend getting in touch with Wyatt & Co who offer support for churches and charities and are excellent accountants.

If you do get in contact with Wyatt & co, they will be able to help you with creating VAT claims manually based on the information in ExpensePlus (until November).