VAT Flat Rate Scheme Calculator

The FRS lets VAT-registered businesses pay a fixed % of their gross (VAT-inclusive) turnover as VAT, instead of calculating output minus input VAT. The rate depends on the business sector.

Businesses with VAT-exclusive turnover of up to £150,000 per year can join FRS. You must leave when VAT-inclusive turnover exceeds £230,000.

If your VAT-inclusive goods (excluding capital expenditure) cost less than 2% of turnover or £1,000/year, you are a Limited Cost Trader and must use the 16.5% flat rate — regardless of your sector.

New FRS registrants get a 1% discount on their flat rate in the first year of VAT registration. So a 14.5% rate becomes 13.5%.

Generally no — you cannot reclaim VAT on purchases under FRS. The only exception is input VAT on capital goods costing over £2,000 (including VAT).

Usually yes. Service businesses have low purchases and therefore low input VAT to reclaim. With FRS, you keep the difference between the 20% VAT charged and the flat rate paid to HMRC.

HMRC publishes a full list of sectors and rates at GOV.UK. Check your business's primary activity against the published table. When in doubt, use the closest applicable sector.

Yes. You continue to charge 20% VAT on sales (or exempt/zero-rated as appropriate). You pay HMRC the flat rate — you keep the difference.

You cannot reclaim input VAT (except capital goods over £2,000); you must leave when turnover exceeds £230,000; and the Limited Cost Trader rate eliminates the benefit for businesses with low purchases.

Apply online at GOV.UK when registering for VAT, or request to join FRS via your online VAT account or by post. You can join any time, subject to turnover limits.

Yes. You can voluntarily leave FRS at any VAT quarter end. You may be required to leave if turnover exceeds the exit threshold.

FRS applies to all your supplies (including zero-rated and exempt). You apply the flat rate to total gross income including exempt income. However, the rate is calculated only on the appropriate sector rate.