Changes to the VAT Flat Rate Scheme
From 1 April 2017 the VAT Flat Rate Scheme will be changing for some small businesses. Currently the flat rates percentages range from 4% to 14.5% depending on the type of business. The new percentage is 16.5% and applies to businesses with low expenditure relative to their sales. The test is if the VAT inclusive expenditure is either less than 2% of the VAT inclusive turnover or less than £250 per quarter then the new rate applies. Certain types of expenditure are excluded: Vehicles and other capital items. Food and drink purchased by the owners / employees. Unless the business is providing transport services such as couriers and taxis then the value of fuel and parts are also excluded. If you think your business may be affected by the changes to the Flat Rate Scheme, then it is worth checking using the criteria above and then comparing your VAT liability to the standard basis. For many small businesses it is worth considering leaving the vat flat rate scheme and returning to standard accounting. As always, we’re here to help. Get in touch if you’d like some help or...
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