What Are the Standard Rate & Flat Rate VAT Schemes?
play_circle

What Are the Standard Rate & Flat Rate VAT Schemes?

When you’re self-employed and VAT-registered, you can choose between the standard or flat rate VAT schemes. Here’s what you need to know about both.

No items found.

Standard Rate VAT Scheme

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.

Flat Rate VAT scheme

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.

Tags

No items found.

Keep reading

Coconut in top spot for HMRC MTD software provision

Coconut is now HMRC-approved MTD IT software. A simple way for sole traders and landlords to get ready for digital tax in 2026 and beyond.

arrow_right

Handy monthly finance essentials checklist for busy sole traders

You don’t have to become a bookkeeper or accountant. All you need to do is take care of a short list of financial essential tasks each month and your business should be in good financial health. And it need not take a lot of time. So, here’s a handy checklist of essential financial tasks that you should be ticking off at least each month.

arrow_right

Why MTD for Income Tax could be great news for your accountancy firm

Turning some of your sole trader and landlord clients into dedicated accounting software users could be one of your biggest challenges in the next few years. But MTD for Income Tax isn’t optional, so, if they won’t pay you to take care of it for them, they’ll have to use accounting software.

arrow_right