Eligibility for the VAT Flat Rate Scheme

The VAT Flat Rate scheme is open to VAT registered businesses that expect their taxable turnover in the next 12 months to be no more than £150,000, excluding VAT. The annual taxable turnover limit is the total of everything that a business sells during the year that is not VAT exempt.

Under the scheme rules, businesses pay VAT as a fixed percentage of their VAT inclusive turnover. The actual percentage used depends on the type of business. There is a special 1% discount for businesses in their first year of VAT registration.

If any of the following apply, you will not be eligible to join the scheme:

  • you left the scheme in the last 12 months;
  • you committed a VAT offence in the last 12 months, for example VAT evasion;
  • you joined (or were eligible to join) a VAT group in the last 24 months;
  • you registered for VAT as a business division in the last 24 months;
  • your business is closely associated with another business;
  • you’ve joined a margin or capital goods VAT scheme; or
  • you are using the Cash Accounting Scheme.

Once you join the scheme you can usually continue using it provided your total business income does not exceed, or you do not expect it to exceed, £230,000 (including VAT) in a 12-month period. You must also leave the scheme if you expect your total income in the next 30 days alone to be more than £230,000 (including VAT). There are special rules if the increased turnover is temporary.

If you think that the scheme may be beneficial for your business, please get in touch and we can help you consider your options.

Share:

Accounting in Sheffield and Doncaster Certificates

Recently Added News

New employment protections

The following changes were enacted from 6 April 2024. These changes apply to England, Wales and Scotland. Northern Ireland is not included as employment law

Read More »

Boost for small businesses

In a recent press release, HMRC underlined the benefits to smaller businesses from the increase in the VAT registration threshold and the business rates freeze.

Read More »

Related News

Journey out of debt

Hopefully, this post will be of help to individuals that find themselves in debt and are struggling to keep up with repayments. It’s interesting to

Stand out from the crowd

It’s interesting to consider the challenges that are plaguing small businesses at present. For example: A frustrating inability to reestablish profit levels to fund investment

Quick Links

Web + SEO - LoudCrowd