See what you pay HMRC on the Flat Rate Scheme. Add 20% VAT to your invoices with the calculator, then apply your sector flat rate percentage to the gross total.
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On the VAT Flat Rate Scheme you still charge your customers the normal 20% VAT, but you pay HMRC a fixed percentage of your VAT-inclusive (gross) turnover instead of accounting for VAT on every sale and purchase. The percentage depends on your trade sector.
Worked example. An IT consultant invoices £10,000 + £2,000 VAT = £12,000 gross. At a 14.5% flat rate they pay HMRC 14.5% × £12,000 = £1,740, keeping the £260 difference. (A 1% discount applies in your first year of registration.)
| Business type | Flat rate |
|---|---|
| Limited cost trader | 16.5% |
| Accountancy or book-keeping | 14.5% |
| Computer and IT consultancy | 14.5% |
| Management consultancy | 14% |
| Architect, civil/structural engineer or surveyor | 14.5% |
| Estate agency or property management | 12% |
| Advertising | 11% |
| Hairdressing or other beauty treatment | 13% |
| Catering including restaurants and takeaways | 12.5% |
| General building or construction (labour only) | 14.5% |
| General building or construction (materials supplied) | 9.5% |
| Retail (food, confectionery, tobacco, newspapers) | 4% |
Watch the 16.5% limited cost trader rate: if your goods cost less than 2% of turnover (or under £1,000 a year) you must use it, which usually wipes out the benefit of the scheme.
You can apply if your VAT taxable turnover is £150,000 or less (excluding VAT). You must leave once your total income exceeds £230,000. Use the calculator above to add 20% VAT to your invoices, then apply your flat rate percentage to the gross total.
Add 20% VAT to your net sales to get the gross, then multiply the gross by your sector flat rate percentage. That figure is what you pay HMRC.
A 16.5% rate that applies if your spending on goods is less than 2% of turnover, or less than £1,000 a year. It mainly affects labour-only and consultancy businesses.
Generally no, except on a single capital asset purchase of £2,000 or more (including VAT).