This calculator works out your VAT bill under the Flat Rate Scheme. Enter your VAT inclusive turnover and your flat rate percentage, and it shows the VAT you pay to HMRC.
[ Flat rate tool sits here: field for VAT inclusive turnover, field for flat rate percentage, output shows VAT payable. ] (tool embeds here)
How the Flat Rate Scheme works
On the Flat Rate Scheme, you still charge your customers the normal 20% VAT. But you pay HMRC a fixed percentage of your VAT inclusive turnover, rather than working out the VAT on every sale and purchase.
The percentage depends on your type of business. You keep the difference between the VAT you charge and the flat rate you pay, which can be worth having. In most cases you cannot reclaim VAT on purchases, apart from some capital assets costing more than £2,000.
How the calculation works
Multiply your VAT inclusive turnover by your flat rate percentage.
Example Turnover including VAT: £60,000. Flat rate: 12%. VAT to pay: £60,000 times 12% = £7,200.
In your first year of VAT registration you get a 1% discount on your flat rate.
Who can join
You can join the Flat Rate Scheme if your VAT taxable turnover is £150,000 or less, not counting VAT. You apply to HMRC to join.
Watch the limited cost trader rule. If you spend very little on goods, less than 2% of your turnover or under a set cash figure, you use a higher flat rate of 16.5%, which leaves little or no gain.
Is the scheme worth it
The scheme can save time and sometimes money, but not always. It helps most when your flat rate is low and you have few VAT bearing costs. If you buy a lot of goods and services with VAT on them, the standard method may leave you better off, because you could reclaim more. Our flat rate versus standard calculator compares the two.
Frequently asked questions
How do I work out flat rate VAT? Multiply your VAT inclusive turnover by your flat rate percentage. For example, £60,000 at 12% is £7,200.
What is the flat rate turnover limit? You can join if your VAT taxable turnover is £150,000 or less, excluding VAT.
What is the limited cost trader rate? If you spend very little on goods, you use a flat rate of 16.5%, which usually removes any saving.
Can I reclaim VAT on the Flat Rate Scheme? Usually no, apart from certain capital assets costing more than £2,000 including VAT.
Is there a first year discount? Yes. You get a 1% reduction on your flat rate for the first year you are VAT registered.