VAT flat rate scheme

  • It may be beneficial to register for the VAT flat rate scheme.
  • If you are expecting turnover, excluding VAT, in the next year to be under £150,000.
  • This means that you keep the difference between 20% VAT charged and your flat rate.
  • Your flat rate can be 4% for food retailing to 14.5% for computer contractors depending on your trade or profession.
  • You invoice adding the normal 20% VAT.
  • You apply your flat rate to your sales including VAT, when completing your VAT return, and keep the difference.
  • Check your flat rate here
  • There is an extra 1%, your flat rate is 1% less, in the first year.
  • The retained figure is added to your sales and is subject to either Corporation Tax or Income Tax, as applicable.
  • You claim no other VAT except when you buy business equipment, including commercial vehicles, costing more than £2,000 when you can claim back this VAT specifically.
  • Preparation of VAT forms is more simple.
  • You need to monitor whether it continues to be beneficial to stay in the scheme.
  • You need to come out of the scheme if your sales, excluding VAT, exceed £150,000 in a year.

Contact us if you wish to register for the VAT flat rate scheme or for general VAT and tax advice