What Are the Standard Rate & Flat Rate VAT Schemes?
play_circle

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.

Tags

No items found.

Keep reading

36 allowable expenses that sole traders and freelancers can claim

Tax-wise, it’s not all bad news, thanks to “allowable expenses”. Your annual tax bill would be much higher without them. As the name suggests, they’re business expenses that HMRC allows you to claim against your income. Claiming all of your allowable expenses helps to lower your profits and minimise your tax bill.

arrow_right

How to deal with overdue invoice payments

Late payment can cause serious cash flow issues and otherwise good customers can be bad when it comes to paying you on time. We explain how to detail with overdue invoice payments.

arrow_right

Want to really set your accountancy firm apart?

If you want to succeed in business, you’ve got to differentiate yourself. That also applies to accountancy firms, of course. So, how can you set your accountancy firm apart?

arrow_right