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VAT Flat Rate Scheme

HMRC operates a VAT flat rate scheme. This means that you simply pay a % of your turnover off to the goverment each month rather than calculate your own VAT return.

How the Flat Rate Scheme Works

So, it can save a lot of time and energy in completing your VAT return each month and keeping records of all your expenses (as you will need VAT receipts to show any inspector) - but, it is very likely that you will be paying more money over to the government than you need to.

The time saving is only probably a few hours each month - and do you really want to be paying more than you should in taxes ?

You can apply for the flat rate scheme if your your annual turnover (excluding VAT) will be £150,000 or less - which just about accounts for most small businesses and of course are above the current threshold to register for VAT

VAT Rates

The rates you will pay depend on your industry and vary widely. They are based on averages - meaning the average of the costs incurred in your business that you will pay VAT on expenses. If you wish to apply, just make sure you choose the lowest rate you can get away with….

Accountancy or book-keeping 13.0%

Advertising 9.5%

Agricultural services 7.5%

Any other activity that is not listed elsewhere 10.0%

Architect, civil and structural engineer or surveyor 12.5%

Boarding or care of animals (not including Vets) 10.5%

Business services that are not listed elsewhere 11.0%

Catering services, including restaurants and takeaways 12.0%

Computer and IT consultancy or data processing 13.0%

Computer repair services 11.0%

Dealing in waste or scrap 9.5%

Entertainment or journalism 11.0%

Estate agency or property management services 11.0%

Farming or agriculture that is not listed elsewhere 6.0%

Film, radio, television or video production 10.5%

Financial services 11.5%

Forestry or fishing 9.0%

General building or construction services 8.5%

Hairdressing or other beauty treatment services 12.0%

Hiring or renting of goods 8.5%

Hotel or accommodation 9.5%

Investigation or security 10.0%

Labour-only building or construction services 13.5%

Laundry or dry-cleaning services 11.0%

Lawyers or legal services 13.0%

Library, archive, museum or other cultural activity 7.5%

Management consultancy 12.5%

Manufacturing fabricated metal products 10.0%

Manufacturing food 7.5%

Manufacturing that is not listed elsewhere 8.5%

Manufacturing yarn, textiles or clothing 8.5%

Membership organisation 5.5%

Mining or quarrying 9.0%

Packaging 8.5%

Photography 9.5%

Post offices 2.0%

Printing 7.5%

Publishing 9.5%

Pubs 5.5%

Real estate activities that are not listed elsewhere 12.0%

Repairing personal or household goods 8.5%

Repairing vehicles 7.5%

Retailing food, confectionery, tobacco, newspapers or children’s clothing 2.0%

Retailing pharmaceuticals, medical goods, cosmetics or toiletries 7.0%

Retailing that is not listed elsewhere 6.0%

Retailing vehicles or fuel 7.0%

Secretarial services 11.0%

Social work 8.5%

Sport or recreation 7.0%

Transport or storage, including couriers, freight, removals and taxis 9.0%

Travel agency 9.0%

Veterinary medicine 9.5%

Wholesaling agricultural products 6.0%

Wholesaling food 5.5%

Wholesaling that is not listed elsewhere 7.0%

More information about the HMRC flat rate VAT scheme can be found on