Enter your net sales, pick your sector and see what you pay HMRC on the Flat Rate Scheme. The calculator applies the first-year discount, runs the limited cost business test and compares the scheme with standard VAT accounting.
On the VAT Flat Rate Scheme you still charge customers VAT at the normal rate, but you pay HMRC a fixed percentage of your VAT-inclusive turnover instead of working out VAT on every sale and purchase. The percentage depends on your trade sector, and you cannot normally reclaim VAT on purchases.
Worked example. An IT consultant invoices £10,000 + £2,000 VAT = £12,000 gross. At the 14.5% rate they pay HMRC 14.5% × £12,000 = £1,740, keeping £260 of the VAT charged. In the first year of registration the rate is 1% lower (13.5%), so they would pay £1,620.
| Business type | Flat rate |
|---|---|
| Accountancy or book-keeping | 14.5% |
| Advertising | 11% |
| Agricultural services | 11% |
| Any other activity not listed elsewhere | 12% |
| Architect, civil and structural engineer or surveyor | 14.5% |
| Boarding or care of animals | 12% |
| Business services not listed elsewhere | 12% |
| Catering services including restaurants and takeaways | 12.5% |
| Computer and IT consultancy or data processing | 14.5% |
| Computer repair services | 10.5% |
| Entertainment or journalism | 12.5% |
| Estate agency or property management services | 12% |
| Farming or agriculture not listed elsewhere | 6.5% |
| Film, radio, television or video production | 13% |
| Financial services | 13.5% |
| Forestry or fishing | 10.5% |
| General building or construction services (labour only) | 14.5% |
| General building or construction services (materials supplied) | 9.5% |
| Hairdressing or other beauty treatment services | 13% |
| Hiring or renting goods | 9.5% |
| Hotel or accommodation | 10.5% |
| Investigation or security | 12% |
| Labour-only building or construction services | 14.5% |
| Laundry or dry-cleaning services | 12% |
| Lawyer or legal services | 14.5% |
| Library, archive, museum or other cultural activity | 9.5% |
| Management consultancy | 14% |
| Manufacturing fabricated metal products | 10.5% |
| Manufacturing food | 9% |
| Manufacturing not listed elsewhere | 9.5% |
| Manufacturing yarn, textiles or clothing | 9% |
| Membership organisation | 8% |
| Mining or quarrying | 10% |
| Packaging | 9% |
| Photography | 11% |
| Post offices | 5% |
| Printing | 8.5% |
| Publishing | 11% |
| Pubs | 6.5% |
| Real estate activity not listed elsewhere | 14% |
| Repairing personal or household goods | 10% |
| Repairing vehicles | 8.5% |
| Retailing food, confectionery, tobacco, newspapers or children's clothing | 4% |
| Retailing pharmaceuticals, medical goods, cosmetics or toiletries | 8% |
| Retailing not listed elsewhere | 7.5% |
| Retailing vehicles or fuel | 6.5% |
| Secretarial services | 13% |
| Social work | 11% |
| Sport or recreation | 8.5% |
| Transport or storage, including couriers, freight, removals and taxis | 10% |
| Travel agency | 10.5% |
| Veterinary medicine | 11% |
| Wholesaling agricultural products | 8% |
| Wholesaling food | 7.5% |
| Wholesaling not listed elsewhere | 8.5% |
| Limited cost business | 16.5% |
| No sector matches that word. Try a broader term, or use "Any other activity not listed elsewhere" (12%). | |
If your business fits more than one sector, use the one that describes most of your turnover, and review it at each anniversary of joining.
Since April 2017 a business must use 16.5% whatever its sector if, in the period, it spends on goods (not services) either less than 2% of its VAT-inclusive turnover, or more than 2% but less than £1,000 a year (£250 a quarter). Goods exclude capital items, food and drink for the business, and vehicles or fuel unless you run a transport business. At 16.5% of the gross you pay 19.8% of the net, so the scheme almost always costs money for consultants, contractors and other labour-only businesses.
You can apply if you expect your VAT-taxable turnover in the next 12 months to be £150,000 or less (excluding VAT). You must leave once your total business income, including VAT, exceeds £230,000 in a year, or you expect it to in the next 30 days. You can leave voluntarily at any time, and you cannot rejoin within 12 months of leaving.
Take your VAT-inclusive turnover for the period (net sales plus the 20% VAT you charged) and multiply it by your sector percentage. That is what you pay HMRC. The calculator above does this and applies the 1% first-year discount and the limited cost test.
A 16.5% rate that overrides your sector rate if your spending on goods is under 2% of gross turnover, or under £1,000 a year. It mainly affects consultants, contractors and labour-only trades.
Generally no. The exception is a single purchase of capital goods costing £2,000 or more including VAT, which you can reclaim in the normal way.
Enter the VAT on your purchases in the calculator and it compares the scheme with standard VAT accounting. The scheme suits businesses with few VATable costs and a low sector rate; it rarely suits limited cost businesses at 16.5%.
Yes. Your invoices show VAT at the normal rate for what you sell. The flat rate only changes how much of it you pay to HMRC.