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
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
Example. An IT consultant with £60,000 of sales, £500 of goods and £3,000 of other costs a year, all before VAT, pays £11,300.00 under standard VAT accounting and £11,880.00 under the Flat Rate Scheme at 16.5%, the limited cost trader rate.
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.
Flat rate percentages by type of business
Applied to turnover including VAT. The first year rate is 1% lower. A limited cost trader pays 16.5% whatever the type of business.
| Type of business | Flat rate | First year |
|---|---|---|
| Accountancy or book-keeping | 14.5% | 13.5% |
| Advertising | 11% | 10% |
| Agricultural services | 11% | 10% |
| Any other activity not listed elsewhere | 12% | 11% |
| Architect, civil and structural engineer or surveyor | 14.5% | 13.5% |
| Boarding or care of animals | 12% | 11% |
| Business services not listed elsewhere | 12% | 11% |
| Catering services including restaurants and takeaways | 12.5% | 11.5% |
| Computer and IT consultancy or data processing | 14.5% | 13.5% |
| Computer repair services | 10.5% | 9.5% |
| Entertainment or journalism | 12.5% | 11.5% |
| Estate agency or property management services | 12% | 11% |
| Farming or agriculture not listed elsewhere | 6.5% | 5.5% |
| Film, radio, television or video production | 13% | 12% |
| Financial services | 13.5% | 12.5% |
| Forestry or fishing | 10.5% | 9.5% |
| General building or construction services | 9.5% | 8.5% |
| Hairdressing or other beauty treatment services | 13% | 12% |
| Hiring or renting goods | 9.5% | 8.5% |
| Hotel or accommodation | 10.5% | 9.5% |
| Investigation or security | 12% | 11% |
| Labour-only building or construction services | 14.5% | 13.5% |
| Laundry or dry-cleaning services | 12% | 11% |
| Lawyer or legal services | 14.5% | 13.5% |
| Library, archive, museum or other cultural activity | 9.5% | 8.5% |
| Management consultancy | 14% | 13% |
| Manufacturing fabricated metal products | 10.5% | 9.5% |
| Manufacturing food | 9% | 8% |
| Manufacturing not listed elsewhere | 9.5% | 8.5% |
| Manufacturing yarn, textiles or clothing | 9% | 8% |
| Membership organisation | 8% | 7% |
| Mining or quarrying | 10% | 9% |
| Packaging | 9% | 8% |
| Photography | 11% | 10% |
| Post offices | 5% | 4% |
| Printing | 8.5% | 7.5% |
| Publishing | 11% | 10% |
| Pubs | 6.5% | 5.5% |
| Real estate activity not listed elsewhere | 14% | 13% |
| Repairing personal or household goods | 10% | 9% |
| Repairing vehicles | 8.5% | 7.5% |
| Retailing food, confectionery, tobacco, newspapers or children's clothing | 4% | 3% |
| Retailing pharmaceuticals, medical goods, cosmetics or toiletries | 8% | 7% |
| Retailing not listed elsewhere | 7.5% | 6.5% |
| Retailing vehicles or fuel | 6.5% | 5.5% |
| Secretarial services | 13% | 12% |
| Social work | 11% | 10% |
| Sport or recreation | 8.5% | 7.5% |
| Transport or storage, including couriers, freight, removals and taxis | 10% | 9% |
| Travel agency | 10.5% | 9.5% |
| Veterinary medicine | 11% | 10% |
| Wholesaling agricultural products | 8% | 7% |
| Wholesaling food | 7.5% | 6.5% |
| Wholesaling not listed elsewhere | 8.5% | 7.5% |
Frequently asked questions
What is the limited cost trader rate?
16.5% of your VAT-inclusive turnover, or 15.5% in the first year of VAT registration. It applies when the goods you buy cost less than 2% of your turnover, or less than £1,000 a year.
Is the flat rate applied to turnover with or without VAT?
With VAT. The percentage is applied to your flat rate turnover, which is every sale including the VAT charged, and it includes zero-rated and exempt sales.
Can I reclaim VAT on purchases under the Flat Rate Scheme?
No, apart from a single purchase of capital goods costing £2,000 or more including VAT.
Who can join the Flat Rate Scheme?
A VAT-registered business that expects taxable turnover of £150,000 or less, excluding VAT, in the next 12 months. You must leave if your total income for the year, including VAT, goes over £230,000.
Related calculators
Sources: VAT Flat Rate Scheme on GOV.UK.
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