Flat Rate VAT Calculator
Use our Flat rate VAT calculator to determine how much you would pay if your business is registered for the HMRC VAT flat rate scheme. The flat rate scheme can save your business time by eliminating the need to record all your VAT transactions and money.
A business can join the scheme if the taxable turnover is less than £150,000 in the next 12 months.
The VAT Flat Rate Scheme is designed to simplify the calculation of VAT returns. For qualifying companies, it can also reduce VAT liabilities.
What is Flat Rate VAT
The Flat Rate VAT scheme simplifies the way businesses in the UK account for their Value-Added Tax (VAT). Instead of calculating the difference between the VAT they charge customers (output VAT) and the VAT they pay on purchases (input VAT), businesses under the Flat Rate Scheme pay HM Revenue and Customs (HMRC) a fixed percentage of their total sales (including VAT).
This fixed percentage, known as the flat rate, varies depending on the type of business. For example, the flat rate for hairdressers is 13%, while the rate for business consultancy is 14%. In the first year of VAT registration, businesses receive a 1% discount on their flat rate.
Key points about the Flat Rate VAT scheme:
- Simplified accounting: It reduces the administrative burden of VAT accounting for small businesses.
- Potential savings: Businesses might be able to keep some of the VAT they collect from customers, depending on their flat rate and the VAT they pay on purchases.
- Restrictions: Not all businesses are eligible for the scheme, and there are limits on the amount of VAT that can be reclaimed on certain purchases.
Who can join the VAT Flat Rate Scheme?
To be eligible, your business must:
- Be VAT registered.
- Have an estimated VAT taxable turnover of no more than £150,000 (excluding VAT) in the next 12 months.
- You will cease to be eligible for the scheme if your income is more than £230,000 in a year.
Is the Flat Rate VAT Scheme Right for Your Business?
This depends on several factors, including your business type, your expected turnover, and the amount of VAT you pay on purchases. It’s recommended to speak to an accountant or tax advisor to determine if the scheme is suitable for you.
For more information, you can visit the official government website: https://www.gov.uk/vat-flat-rate-scheme
Accounting Software for Flat Rate VAT
If you are planning to use the VAT flat rate scheme, the best way to implement it is to use accounting software such as Sage UK, Xero, or QuickBooks. Most software providers offer a flat-rate option in the business settings. Take a look at the following options:
Accounting Software Best Deals
Sage UK – 90% for 6 Months – FREE plan for Sole-Traders, AI tools for bookkeeping automation
QuickBooks – 90% Discount for 7 Months – Invoicing, expense tracking, payroll, financial reports
XERO – 90% Discount for 6 Months – Cloud accounting, unlimited users, smart bank feeds
VAT Flat Rate Scheme Example
Here’s an example comparing the Flat Rate VAT scheme and the normal VAT scheme for a small crafting company:
Flat rate scheme Scenario:
- Small crafting company
- Turnover: £95,000 VAT period of a year (including VAT)
- Purchases: £40,000 per year (excluding VAT)
- Standard VAT rate: 20%
- Flat Rate VAT rate (for retail other): 7.5%
- First year of VAT registration: Yes (1% discount on flat rate)
Normal VAT Scheme:
VAT on Sales: £95,000 * 20% = £19,000
VAT on Purchases: £40,000 * 20% = £8,000
VAT Payable to HMRC: £19,000 – £8,000 = £11,000
Flat Rate VAT Scheme:
Discounted Flat Rate: 7.5% – 1% = 6.5%
Flat Rate VAT Payable: £114,000 (£95,000 + VAT) * 6.5% = £7,410
Comparison:
| Scheme | VAT Paid |
| Normal VAT | £11,000 |
| Flat Rate Scheme | £7,410 |
| Potential Savings | £3,590 |
How to use the Flat Rate VAT Calculator
Enter the amount of your VAT-inclusive turnover, total sales, including VAT. For example, if you charge VAT on all your invoices, total sales are £95,000, and the VAT rate is 20% (standard rate), you would enter £114,000 (95,000 + £19,000) as the VAT-inclusive turnover.
Use the table below to find the flat-rate percentage for your business type, and enter the figure only. If your business type is not listed, a complete list is available on the HMRC website. If you are in your first year as a VAT-registered business, you are entitled to a further 1% reduction. Therefore, an accounting-type business would enter 13.5 in the flat rate box.
| Business Type | Flat Rate Percentage |
| Accountancy or Bookkeeping | 14.5 |
| Advertising | 11 |
| General Building or construction | 9.5 |
| Hotel or accommodation | 10.5 |
| Printing | 8.5 |
| Retailing food, confectionery, tobacco, newspapers or children’s clothing | 4 |
| Retailing pharmaceuticals, medical goods, cosmetics or toiletries | 8 |
| Retailing other | 7.5 |
| Secretarial services | 13 |
| Transport or storage | 10 |
| Limited Cost Business (Purchases less than £2,000) | 16.5 |
FREE Flat Rate VAT Calculator
What is the Flat Rate VAT Scheme UK?
The Flat Rate VAT Scheme is a simpler way for small businesses to handle VAT. You still charge your customers the standard 20% VAT, but you pay HMRC a lower fixed rate based on your business type.
Who can use the Flat Rate VAT Scheme?
Small businesses in the UK can join the Flat Rate Scheme if their VAT-taxable turnover is £150,000 or less (excluding VAT) when they register.
How do I find my flat rate VAT percentage?
Each business type has its own flat rate percentage set by HMRC. You can check HMRC’s full list of rates.
Conclusion for VAT Flat Rate Scheme Calculator
Use our free VAT flat rate scheme calculator to check how much VAT you would pay HMRC. Using the flat rate scheme may save time and money. We always advise seeking full advice from an accounting professional.
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