The UK Rules
Current Flat Rate Scheme Percentages

VAT Flat Rate Scheme Percentages 2022

This guide explains the process for working out VAT flat rate scheme percentages. There are periodic changes to the flat rate scheme so you must use the most current proportions.

FLAT RATE PERCENTAGES: As a rule, it's business type that determines which VAT flat rate you should use.

Thus, businesses that only spend a small amount on goods or services may pay a different rate than others.

Even so, businesses which are in their first year of VAT registration can get a discount of one percent (1%).

Limited Cost Business Flat Rate

Businesses that spend a small amount on their goods will get classed as a 'limited cost business'. This applies when the goods purchased cost less than:

In this case you would be paying a higher rate of 16.5%. There are ways to check your VAT flat rate and calculate whether you need to pay the higher rate. The calculations helps you work out which goods will count as costs.

A different process takes place for those who are not running a limited cost business. In these cases you use the 'business type' for working out VAT flat rate percentages 2022 (see below).

VAT Flat Rates 2022: Current and in Percentages

Note: Special rules apply to 'labour-only building or construction services*'. It refers to building services where the value of materials supplied is below 10% of the turnover for those services. The business gets classed as 'general building or construction services' if it is more than this amount.

Calculating Flat Rate VAT 2022/23

You need to multiply the VAT flat rate percentage by the business 'VAT inclusive turnover' to work out how much tax to pay.

VAT inclusive turnover is not the same as standard VAT turnover. It combines business income from sales as well as Value Added Tax paid on that income.

An Example:
The bill paid by a customer is £2,000 plus VAT at 20% which makes £2,400 in total.

Your business type is catering which means the VAT flat rate for the business is 12.5%.

The VAT flat rate payment would be £300 (12.5% of £2,400) to pay in this example calculation.

You can get further help by calling the VAT Helpline at HMRC. They will try to answer your questions about the Flat Rate VAT Scheme for Value Added Tax.

VAT Flat Rate Scheme Percentages: Working Out How Much You Pay in United Kingdom