VAT Flat Rate Scheme Calculator.
Flat rate against standard VAT on your own numbers — including the 16.5% limited-cost trap.
Standard VAT
Flat Rate Scheme
Both schemes charge your customers 20% — the difference is what you hand over. Standard: output VAT minus input VAT on costs. Flat rate: your sector percentage applied to gross (VAT-inclusive) turnover, with no input reclaim on day-to-day costs. Buy few goods and the flat rate can flip against you as a limited-cost trader — Everything runs in your browser — your figures never leave it. Estimates are general information, not advice: ask us about your own position.
The percentage that flatters
Simpler is not the same as cheaper.
The Flat Rate Scheme sells itself on simplicity: charge customers 20% as normal, pay HMRC a single sector percentage of your gross takings, skip the input-VAT bookkeeping. The catch is arithmetic: that percentage applies to your VAT-inclusive turnover, and you give up reclaiming VAT on almost everything you buy. Whether that trade helps or hurts depends entirely on your cost base — which is why this calculator asks for it.
And the trap with its own name: the limited-cost trader. Spend less than 2% of turnover (or under £1,000 a year) on goods — most consultants, contractors and service businesses — and your sector rate is replaced by 16.5%, which on the gross figure is almost the whole 20% you charged, with nothing to reclaim. For many service businesses the scheme stopped making sense the day that rule arrived; plenty are still on it out of habit. We check, as a matter of course.
Common questions.
Who can join the Flat Rate Scheme?
Businesses expecting VAT-taxable turnover of £150,000 or less (excluding VAT) in the next year. You must leave once gross income passes £230,000. Joining and leaving are both applications to HMRC — and leaving when the maths turns against you is allowed and often overdue.
What is a limited-cost trader?
A business whose spending on goods (not services, not capital items, not food or vehicles) is less than 2% of gross turnover, or less than £1,000 a year. Limited-cost traders must use 16.5% regardless of sector — which usually erases the scheme's benefit entirely. Most labour-only and consultancy businesses are caught.
Can I still reclaim any VAT on the flat rate?
Only on single capital asset purchases of £2,000 or more including VAT. Day-to-day costs, services, subscriptions and small equipment carry unreclaimable VAT — that is the price of the simplicity, and it is exactly what this calculator weighs against your sector percentage.
Keep going.
VAT Calculator
The everyday arithmetic — add VAT on, strip VAT out.
Open →VAT, handled
Scheme choice, registration timing and returns filed on time under MTD.
Open →Break-Even Calculator
While you're pricing properly — find the volume where the business pays.
Open →Prefer a human with the numbers?
If you joined the flat rate before 2017 and never rechecked, that is a five-minute review that regularly finds money.