Our new features are designed to make VAT simpler and less stressful. The Fluidly forecast now automatically estimates what you need to pay HMRC each quarter, so you can save a huge amount of time and get the right plan in place.
How do the new VAT features help?
More than half of accountants calculate VAT in Excel, but spreadsheet formulas are notoriously fiddly, time-consuming and prone to human error. Add to that the government’s VAT deferral scheme, and VAT can get complicated very quickly.
Our new features make VAT easier by giving you an estimate quickly. While Fluidly isn’t meant to replace calculating VAT entirely, it does provide a strong indication of what’s coming up – so you spend less time in spreadsheets and more time planning.
Whether you’re a business owner or an adviser, this feature allows you to be more proactive and catch cashflow issues early. Here are the key benefits:
- Save considerable time: VAT is automatically estimated alongside other cash movements. Estimates are as accurate as possible, but you can tweak them too.
- See the full picture: Changes that you make elsewhere in the forecast, like adding or adjusting sales, will also automatically carry through and adjust future VAT payments.
- Make the most of the VAT deferral scheme: Easily navigate the government’s VAT deferral scheme by deferring payments and setting up payment plans.
How do these features work in practice?
Example #1: Jane owns a commercial property that brings in £5,000 a month from rental income. Jane expects that figure to increase to £10,000 a few months down the line.
Since VAT is applied to rental payments, if Jane were to adjust her rental income for three months’ time in her forecast, the amount in her next estimated VAT return will then automatically increase.
Example #2: John runs an insurance business. If he were to adjust a cash movement relating to insurance payments, this change wouldn’t impact his forecasted VAT payments, as insurance is VAT exempt.
Example #3: Jenny runs a marketing agency and has just signed a contract with a new client, who will be paying her the same amount each month. VAT applies to this service.
If Jane were to add this regular transaction to her forecast, this would increase her next estimated VAT return, along with other VAT returns in the future.
Who is this new feature available to?
We’re starting with standard or accrual VAT accounting, where businesses pay VAT every quarter, as it’s the most common approach.
Automatic VAT estimation is currently available to Xero users. We’re looking to release it to QuickBooks users later this month.
How does Fluidly calculate VAT?
Our estimates are based on:
- Payments
- Invoices raised
- Bills received
- Regular and one-off transactions
- Any adjustments in your forecast between the VAT quarter you’ve set
You can read a more detailed explanation on our help page here.
VAT applies to the majority of goods and services, so any adjustments you make, where relevant, will change your VAT estimates going forward. If a sale is VAT exempt, then that won’t be included.
How do I get set up?
Here’s how it works for Xero users, who we’re starting with first:
Once you’re logged in to Fluidly, go to your Forecast settings. There’s now a “VAT” section on this window, where you have the option to turn on “Auto-VAT estimates”. Simply toggle this switch and then select when your VAT quarter ends.
After you do that, your VAT estimates will appear in your forecast. Scroll down and you’ll see the estimates as a new account line under “cash movements”, alongside other expenses like payroll, office costs and utility bills.
What’s coming next?
After we release these VAT features for QuickBooks users, we have more VAT-related features in the works too – including editing and moving the date of estimate. Stay tuned for more.
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