Flat Rate VAT Scheme guide

Flat Rate VAT Scheme guide

When you submit your VAT Return, there are different methods you can use. The Flat Rate VAT Return is a popular method with small businesses, but what is the Flat Rate Scheme and why could it be a good option for your business?

What is the Flat Rate scheme?

The Flat Rate scheme allows you to pay a fixed rate of VAT to HMRC. This is a reduced fixed rate percentage on your Gross Turnover (Net turnover plus VAT). But, using the Flat Rate scheme means you can’t reclaim VAT on your purchases except for some capital assets that were bought for over £2,000.

Flat Rate VAT scheme example

If your Flat Rate percentage is 16.5% and your turnover for the VAT period is £100,000 plus VAT of £20,000, then you will pay HMRC £19,800 (16.5% of £120,000) making a saving of £200.

How do I qualify for the Flat Rate scheme?

To join the Flat Rate scheme you must have a taxable turnover of £150,000 or less. You can use the scheme with either cash or accrual accounting methods. Your business must be VAT registered.

Why would I choose the Flat Rate Scheme?

There are two main reasons as to why you would choose to use the Flat Rate Scheme:

To make a saving on VAT if the things you purchase don’t have much VAT on them.
The Flat Rate scheme is a simple way to calculate VAT and can save you time. This means you don’t need to record all your purchases with VAT, making it quick and easy to file your VAT Return at the end of the quarter.

Find out more about VAT

Flat Rate Scheme percentages

Here's a list of the Flat Rate Scheme percentages by business type:

Business type VAT flat rate
A
Accountancy or bookkeeping 14.5%
Advertising 11%
Agricultural services 11%
Architect, civil and structural engineer or surveyor 14.5%
B
Boarding or care of animals 12%
Business services not listed elsewhere 12%
C
Catering services including restaurants and takeaways 12.5%
Computer and IT consultancy or data processing 14.5%
Computer repair services 10.5%
E
Entertainment or journalism 12.5%
Estate agency or property management services 12%
F
Farming or agriculture not listed elsewhere 6.5%
Film, radio, television or video production 13%
Financial services 13.5%
Forestry or fishing 10.5%
G
General building or construction services 9.5%
H
Hairdressing or other beauty treatment services 13%
Hiring or renting goods 9.5%
Hotel or accommodation 10.5%
I
Investigation or security 12%
L
Labour-only building or construction services 14.5%
Laundry or dry-cleaning services 12%
Lawyer or legal services 14.5%
Library, archive, museum or other cultural activity 9.5%
M
Management consultancy 14%
Manufacturing fabricated metal products 10.5%
Manufacturing food 9%
Manufacturing not listed elsewhere 9.5%
Manufacturing yarn, textiles or clothing 9%
Membership organisation 8%
Mining or quarrying 10%
P
Packaging 9%
Photography 11%
Post offices 5%
Printing 8.5%
Publishing 11%
Pubs 6.5%
R
Real estate activity not listed elsewhere 14%
Repairing personal or household goods 10%
Repairing vehicles 10%
Retailing food, confectionery, tobacco, newspapers or children’s clothing 4%
Retailing pharmaceuticals, medical goods, cosmetics or toiletries 8%
Retailing not listed elsewhere 7.5%
Retailing vehicles or fuel 6.5%
Secretarial services 13%
Social work 11%
Sport or recreation 8.5%
Transport or storage, including couriers, freight, removals and taxis 10%
Travel agency 10.5%
Veterinary medicine 11%
Wholesaling agricultural products 8%
Wholesaling food 7.5%
Wholesaling not listed elsewhere 8.5%
Other activity not listed elsewhere 12%

 

Can I do a Flat Rate VAT Return with Bokio bookkeeping software?

If you need to do a Flat Rate VAT Return, we can process your Flat Rate adjustment if you email us at support@bokio.co.uk once you have completed your bookkeeping for the relevant period. Include your Company name and Flat Rate Percentage on this email so that we are able to make this adjustment for you.