VAT Flat Rate Scheme Calculator

Choose your type of business and enter your sales and costs to compare the Flat Rate Scheme with standard VAT accounting, including the limited cost trader rate.

Your business
GBP
Stock, materials, stationery, gas and electricity. Not services, rent, phone, software, food and drink, vehicles or fuel (unless you run a transport business), or equipment you keep.
GBP
Flat Rate Scheme costs more, a year
£580.00
Standard VAT is cheaper Compared with standard VAT accounting
Your flat rate
16.5%
Limited cost trader
Goods needed to avoid 16.5%
£1,440.00
You are £840.00 short, including VAT
VAT to pay HMRC for the year
Scheme Rate VAT on sales VAT reclaimed VAT to pay Against standard
Standard VAT accounting VAT charged less VAT on purchases — 12,000.00 700.00 11,300.00 —
Flat rate, Computer and IT consultancy or data processingIf you bought enough goods 14.5% 10,440.00 0.00 10,440.00 860.00saved
Flat rate, limited cost traderApplies to youFlat rate on sales including VAT 16.5% 11,880.00 0.00 11,880.00 580.00more to pay
Workings
Sales (£)
Sales excluding VAT
60,000.00
VAT charged to customers
12,000.00
Flat rate turnover All sales including VAT, zero-rated and exempt sales too
72,000.00
Limited cost trader test (£)
Goods bought, including VAT
600.00
Goods must be at least 2% of £72,000.00, or £1,000 a year if that is more
1,440.00
Below the test: limited cost trader, 16.5% applies
16.5%
Flat Rate Scheme (£)
Flat rate VAT 72,000.00 × 16.5%
11,880.00
VAT to pay on the Flat Rate Scheme
11,880.00
VAT to pay on standard accounting 12,000.00 charged less 700.00 on purchases
11,300.00
Extra cost of using the Flat Rate Scheme
£580.00
Estimate only. Uses a full year of figures and the flat rates in force now. Assumes other costs and equipment carry 20% VAT, that the equipment is one purchase, and that you make no sales of capital assets and buy no services from abroad. On the scheme you still charge customers VAT at the normal rate; the difference between that and the flat rate VAT is part of your income for tax purposes. The limited cost test is applied to each VAT return, so a quarter with few purchases can be at 16.5% on its own.
Guidance only. This calculator gives a general estimate and is not tax advice. Speak to your accountant before relying on these figures or making any decisions based on them.

How the Flat Rate Scheme works

You still charge your customers VAT at the normal rate, but instead of paying HMRC the difference between the VAT on your sales and the VAT on your purchases, you pay a fixed percentage of your turnover including VAT. The percentage depends on your type of business. You cannot reclaim VAT on purchases, apart from a single purchase of capital goods costing £2,000 or more including VAT.

Limited cost traders

Whatever your type of business, you pay 16.5% if the goods you buy cost less than 2% of your turnover, or less than £1,000 a year. Only goods used wholly in the business count: stock, materials, stationery, gas and electricity. Services, rent, software, food and drink, vehicles, fuel and equipment you keep do not count. At 16.5% of the VAT-inclusive figure the scheme takes almost all the VAT you charge, so it rarely pays for a business that mainly sells its time.

The first year discount

The flat rate is reduced by 1% until the day before the first anniversary of your VAT registration. The discount applies to the limited cost rate too, making it 15.5%.

Who can join, and when you must leave

You can join if you expect your taxable turnover in the next 12 months to be £150,000 or less, excluding VAT. Once on the scheme you must leave if your total income for the year, including VAT, goes over £230,000.

Cash accounting and annual accounting

The other VAT schemes change when you pay, not how much. Cash accounting means you account for VAT when money is received and paid rather than when invoices are raised. Annual accounting means one return a year with payments on account. The Flat Rate Scheme can be combined with annual accounting, and it has its own cash-based method.

Need to file a VAT return?

Tax Optimiser submits Making Tax Digital VAT returns to HMRC straight from your Excel spreadsheet or bookkeeping software.

MTD VAT filing