VAT Flat Rate Scheme Calculator
Figure out if the VAT Flat Rate Scheme is the way to go for your business in a matter of minutes.
Estate agency or property management services (12%)
Entertainment or journalism (12.5%)
Social work (11%)
Secretarial services (13%)
Veterinary medicine (11%)
Financial services (13.5%)
Lawyer or legal services (14.5%)
Manufacturing food (9%)
Amount to be paid under Flat Rate Scheme
Amount to be paid under Current Scheme
Using the Flat Rate Scheme you can reduce your taxes paid by 0%
You can be more benefitted by using the Standard Rate Scheme
What is the Flat Rate Scheme?
Introduced by HMRC, the VAT Flat Rate Scheme is a simplified way for small businesses to pay VAT, wherein they pay a fixed percentage of their annual turnover. It's intended to allow businesses to pay roughly the same amount of VAT without having to complete as much paperwork as other VAT schemes.
With the Flat Rate Scheme:
- You pay a fixed rate of VAT to HMRC
- You keep the difference between what you charge your customers and what you pay to HMRC
- You cannot reclaim the VAT on your purchases, except for certain capital assets over £2,000
Who is eligible to join the Flat Rate Scheme?
Businesses looking to use the VAT Flat Rate Scheme must apply to HMRC and meet certain criteria.
To join the VAT Flat Rate Scheme, your business must:
- Be VAT registered
- Have an annual turnover of under £150,000 (excluding VAT)
Once you join the scheme, you can keep using it until your total business income exceeds £230,000 a year. Participants have the right to leave the scheme at any point.
Certain businesses can’t join the VAT Flat Rate Scheme, including those which:
- Left the scheme within the past 12 months
- Have committed a VAT offense within the past year, such as VAT evasion
- Are closely associated with another business — for example, by having close financial or organizational ties
How does this tool calculate VAT under the Flat Rate Scheme?
The tax you pay is calculated by multiplying your VAT flat rate by your VAT-inclusive turnover.
For example, if you have a turnover of £10,000 and a flat rate of 10%, you would pay a flat rate of £1,000 (10% of £10,000).
Your flat rate is set according to the type of business you run and how much you spend on goods. However, all businesses get a 1% discount in the first year they’re registered for VAT.
To make use of the Zoho's free VAT Flat Rate Scheme Calculator:
- Select your industry to find to determine your tax rate.
- Then, Enter your Turn Over (which includes your total sales and the VAT collected on all inputs), VAT reclaimed on all inputs and VAT reclaimed on Captial Expendtiure.
- In a matter of seconds, the amount to be paid under the Fat Rate Scheme and by how many percent you reduce on tax under the Flat Rate Scheme will be generated for your business.
What are the pros and cons of the VAT Flat Rate Scheme?
The VAT Flat Rate Scheme has several benefits, including:
- Helping businesses manage their cash flow
- Lower fixed rates than the standard rate
- Easier record-keeping
However, the scheme isn’t beneficial for everyone. Businesses that spend relatively little on goods, such as service providers, or businesses that regularly buy and sell goods from outside of the UK, may find this scheme more complex than other methods of paying tax.