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Business · FRS rates

Flat Rate VAT Calculator

The Flat Rate Scheme lets you pay HMRC a fixed % of your VAT-inclusive turnover instead of tracking input VAT. Great for service businesses with low expenses, terrible if you spend a lot on VAT-able goods.

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%
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Standard scheme is better by

£1,267/yr

Side-by-side

  • Standard: VAT collected
    £13,333
  • Standard: less input VAT
    £10,333
  • FRS: % of gross turnover
    £11,600

How we calculated your result

Standard scheme: VAT collected (1/6 of gross sales) − input VAT on expenses. FRS: industry-specific % × VAT-inclusive turnover. Difference = annual saving (or loss) from joining FRS.

Official UK rules in simple English

  • Eligible if VAT-able turnover under £150k.
  • Must leave when turnover exceeds £230k.
  • 1% first-year discount for newly-VAT-registered businesses.
  • ‘Limited cost trader’ rate of 16.5% applies if goods cost <2% of turnover (or under £1,000/yr).

Common pitfalls to watch out for

  • ⚠ Limited cost trader trap

    Most consultants and IT contractors fall in this category. The 16.5% rate usually wipes out the FRS benefit.

  • ⚠ Can’t reclaim capital goods

    Except items over £2,000 — laptops, machinery, etc.

  • ⚠ Charge 20% to customers

    Even on FRS, you still invoice 20% VAT. You just keep the difference.

Frequently asked questions

What rate applies to me?
Look up gov.uk ‘VAT Flat Rate Scheme’. IT consultants 14.5%, journalists 12.5%, hairdressers 13%, etc.
Can I switch later?
Yes — give 30 days notice. You can’t rejoin within 12 months of leaving.

Indicative comparison. Check the latest FRS rates and your specific business category.

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