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.
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.
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Invoices, they’re all the same, right? Well, no, they’re not. There are several types of invoice and they each serve a different purpose. Here’s some of the most common types of invoice and why you might send or receive one.
A customer might well ask you to send them a new, updated invoice, which can also steal your time, when your day is busy enough. It’s best to know exactly what you need to include in your customer invoices and use a fool-proof system that prevents any essential information from being left out.
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