Accountant in Milton Keynes. We are not just accountants - we help your business with ideas.

Changes to Flat Rate VAT

Ten Facts You Might Not Know About Stamp Duty

Changes have been announced in the recent Autumn Statement to the way some businesses will have to handle their flat rate VAT.

Under the current scheme, businesses using the flat rate scheme pay across a percentage of their VAT-inclusive sales to HMRC, based on the trade sector in which they operate. 

For example, accountants and bookkeepers pay 14.5%, whilst advertising businesses pay 11%.

However, businesses that HMRC class as “limited cost traders” (those who spend less than 2% of the value of their sales on goods –  NOT services) will have to apply a fixed flat rate of 16.5% with effect from 1st April 2017.

This could mean a significant increase in the amount of VAT payable for some businesses, so anyone currently trading below the VAT threshold may wish to deregister, and others may find it beneficial to switch to standard VAT accounting.