VAT Flat Rate Scheme

The Flat Rate Scheme was introduced as an easy way for modest businesses to calculate their VAT liability.

The Flat Rate VAT scheme is offered to organizations with a taxable turnover below 150,000 excluding VAT (also exempt and non-taxable sales ought to be beneath 37,500).

Beneath the flat rate scheme, you just hold a percentage of the VAT charged to your buyers. The percentage you keep varies based upon which sector you are in.

You ignore VAT on your purchases, the VAT you spend simply becomes a price. Eg If you devote 10 + VAT on stationery, the price of that stationery becomes 11.75.

The flat rate scheme does let you to reclaim the VAT on 'large' capital products - exactly where you devote much more than 2,000 you can reclaim the VAT on that item.

Should I be on the flat rate scheme?

As you claim a percentage of sales, those with greater sales stand to benefit a lot more.

These with low purchases (therefore paying little in reclaimable input tax) also stand to gain from the scheme.

For instance A company with sales of 149,000 (excluding VAT) and in the category of "any other activity not listed elsewhere" - 10% flat rate and with negligible input VAT say 500 will save 8,068 per annum by switching to the Flat Rate VAT scheme.

To see how a lot you may save, try the Flat Rate VAT scheme calculator

How do ppi claims letter I join the Flat Rate VAT Scheme?

The simplest way is to contact the VAT suggestions line on 0845 010 9000, who will be capable to take your VAT registration quantity and related specifics on the telephone, following which you will be registered following about 21 days.

Alternatively, you can download the scheme application form from HMRC .

How do I determine which sector my business falls into?

If your enterprise has sales in two or more sectors, you should apply the percentage suitable to the principal enterprise activity, as measured by your sales.

Some sectors are clearer than others. The distinction in between "other company services" and "services not elsewhere specified" is far from clear. If you telephone HM Revenue & Customs for guidance, make ppi claims letter sure you maintain a note of the name of the ppi claim letter particular person you speak to and the date of the call.