Savings for smaller businesses
Smaller businesses: VAT Flat Rate could save you money!
Smaller businesses with a turnover below £150,000 should investigate the VAT Flat Rate Scheme. This alternative method of assessing how much VAT is owed each quarter has helped save money for many of our clients.
HMRC offer smaller businesses simplified ways to account for VAT; the so-called 'special schemes'. Unless you opt to apply one of the special VAT schemes (for example the Flat Rate Scheme) you will pay VAT based on the difference between the VAT you add to your sales and the VAT you pay on goods and services that you buy.
If you apply to use the Flat Rate Scheme you still add VAT at the appropriate rate to all your sales but your quarterly bill is calculated by multiplying your turnover including VAT by a fixed percentage rate - the Flat Rate. The rate varies according to the type of business you run.
Why is it important to you?
Applying the Flat Rate Scheme could save you money! If your turnover is below £150,000, it's worth crunching the numbers to see if savings can be made. The key is to find out which flat rate applies to your business and work out your annual VAT based on both the standard and Flat Rate methods. Or call us and we'll do it for you!