VAT Flat Rate Scheme calculator
Popular with contractors, freelancers and small agencies. Enter your gross (VAT-inclusive) turnover for the period and your sector's flat rate percentage to see exactly how much VAT you'd pay HMRC, and how much you keep.
How the Flat Rate Scheme works
You still charge customers VAT as normal, usually 20%. But instead of tracking VAT on every purchase, you pay HMRC a smaller, fixed percentage of your gross turnover and keep the rest. If you have few expenses that carry VAT, that gap can add up to a modest profit. The trade-off is that you generally can't reclaim VAT on purchases, apart from a few exceptions for larger equipment costing over £2,000.
- Join if your VAT-taxable turnover is £150,000 or less
- Leave once your total business income exceeds £230,000
- Limited cost trader rate: 16.5% (if goods spend is under 2% of turnover, or under £1,000/year)
You can find your sector's rate on gov.uk's Flat Rate Scheme percentages.
Default shown is the limited cost trader rate. Replace it with your sector's rate.
Frequently asked questions
What is the VAT Flat Rate Scheme? +
It lets eligible small businesses pay HMRC a fixed percentage of their turnover, instead of working out the difference between VAT charged and VAT reclaimed on every purchase. The percentage you use depends on your trade sector.
Who can join the VAT Flat Rate Scheme? +
Your VAT-taxable turnover must be £150,000 or less (excluding VAT) to join. You must leave the scheme once your total business income (including VAT) exceeds £230,000, or if you no longer expect to qualify.
What is the limited cost trader rate? +
If your business spends very little on goods (not services), less than 2% of turnover, or less than £1,000 a year even if that is more than 2%, you are classed as a "limited cost trader" and must use a flat rate of 16.5%, regardless of your actual trade sector.
Where do I find my sector's flat rate percentage? +
HMRC publishes the full list of flat rate percentages by trade sector on gov.uk. Look up your rate there, then enter it into the calculator above to see what you'd owe.