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.
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?
We have added bookkeeping templates to help you adjust your Flat rate returns by yourself. Read more about this here.
Note: This article was updated August 2023
