The VAT Flat Rate Scheme can be a really smart decision to make if you are self employed, starting a new business or work in certain types of industries. Here are 5 great reasons to use the VAT Flat Rate Scheme:
- You get a 1% additional discount on your flat rate percentage for your first year of VAT registration;
- You can generate a ‘profit’ for yourself because the rate that you pay VAT over to HMRC is lower than the standard rate of VAT, currently 20%;
- It simplifies your VAT reporting since you only need to report on income not expenses;
- You can still claim for VAT on capital assets you buy like a laptop;
- When combined with cash accounting, the Flat Rate Scheme can be really helpful for your cashflow.
As with any VAT scheme you should make sure that it is right for you and your circumstances. I advise you to get professional advice but you can start by trying my free VAT Flat Rate Calculator which shows you:
- Whether you are entitled to the 1% rate discount;
- If you are affected by the regulations of Limited Cost Trader;
- Predicts which scheme would be most beneficial to you based on your estimations.