Flat Rate Scheme

If your VAT taxable turnover is less than £150,000, you could simplify your VAT accounting by calculating your VAT payments as a percentage of your total VAT-inclusive turnover. Although you can't reclaim VAT on purchases - it's taken into account in calculating the flat rate percentage - the Flat Rate Scheme can reduce the time that you need to spend on accounting for and working out your VAT. Even though you still need to show a VAT amount on each sales invoice, you don't need to record how much VAT you charge on every sale in your accounts. Nor do you need to record the VAT you pay on every purchase.

If you're newly VAT registered you can reduce your flat rate by 1% until the day before the first anniversary of your VAT registration.

You can't join the Flat Rate Scheme if:

• you were in the scheme and left during the previous 12 months
• you are, or have been within the previous 24 months
  • eligible to join an existing VAT group
  • registered for VAT as a division of a larger business
• you use one of the margin schemes for second-hand goods, art, antiques and collectibles, the Tour Operators' Margin Scheme, or the Capital Goods Scheme
• you've been convicted of a VAT offence or charged a penalty for VAT evasion in the last year
• your business is closely associated with another business

You can get more information about the VAT Flat Rate Scheme on the GOV.UK