What Are the Standard Rate & Flat Rate VAT Schemes?

What Are the Standard Rate & Flat Rate VAT Schemes?

When you’re self-employed and VAT-registered, you can choose between the standard or flat rate VAT schemes. Here’s what you need to know about both.

No items found.

Standard Rate VAT Scheme

On the Standard Rate VAT Scheme, you charge VAT on invoices (usually 20%) and pay this over to HMRC. You can reduce the amount you pay by claiming the VAT you pay on allowable expenses.

On this scheme, you have to keep track of the VAT you charge on your invoices, and also the VAT you pay on expenses.

If you earn over £85,000, you must register for VAT.

Learn more on gov.uk.

Flat Rate VAT scheme

If you earn under £150,000, you can opt to use the Flat Rate Scheme instead of the Standard Rate Scheme.

It’s intended to be a simpler way to manage your VAT, as instead of keeping track of VAT on all income and expenses, there is a different calculation.

You still charge the relevant VAT rate on your sales (usually 20%). Then each VAT period, you add up your total sales including VAT, and multiply it by the relevant flat rate for your industry.

Learn more on gov.uk.

If you’re unsure which is best for you, speak to your accountant or tax advisor.


No items found.

Coconut helps you track income, claim expenses and sort your taxes. Start your 30-day free trial now.

Get Started
Sign Up

Keep reading

Do I Need To Complete A Self Assessment Tax Return?

Confused about whether you need to file a Self Assessment tax return this year? You're not alone. HMRC has specific rules for each different situation, and it can quickly get confusing. Read on for our full guide to who needs to file a return.


Autumn Statement 2022: What It Means for Sole Traders & Landlords

On 17th November 2022, Chancellor of the Exchequer Jeremy Hunt made his Autumn Statement to the House of Commons. In this article, we’ve summarised everything you need to know about how it will affect you (or your clients) as a sole trader or landlord.


What Does the 2022 Mini-Budget Mean for Sole Traders & Landlords?

In his first major announcement since taking office, the new Chancellor Kwasi Kwarteng has today announced an array of changes to tax and duties in his ‘mini-budget’. But what do the changes mean for sole traders and unincorporated landlords?