{"id":12587,"date":"2023-07-07T03:51:59","date_gmt":"2023-07-07T03:51:59","guid":{"rendered":"https:\/\/www.theukrules.co.uk\/?page_id=12587"},"modified":"2023-09-20T07:03:58","modified_gmt":"2023-09-20T07:03:58","slug":"flat-rate-scheme","status":"publish","type":"page","link":"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/vat\/flat-rate-scheme\/","title":{"rendered":"VAT Flat Rate Scheme Explained | Flat Rate Changes 2022"},"content":{"rendered":"<p><strong>FLAT RATE SCHEME<\/strong>: All <a href=\"\/rules\/business\/tax\/vat-businesses\/\">VAT registered businesses<\/a> report the amount of VAT paid on purchases and the amount charged to customers.<\/p>\n<p>The difference in these amounts will either get paid to, or claimed from, HM Revenue and Customs. But, the VAT Flat Rate Scheme is different:<\/p>\n<ul>\n<li>Payments to HMRC will be at a <a href=\"\/rules\/employment\/taxation\/vat\/flat-rate-scheme-percentages\/\">fixed rate of VAT<\/a>.<\/li>\n<li>The company retains the difference between the VAT amount charged to customers and the amount payable to HMRC.<\/li>\n<li>The business cannot reclaim the VAT on purchases (except for certain capital assets over \u00a32,000).<\/li>\n<\/ul>\n<p>VAT turnover must be \u00a3150,000 or less, excluding VAT, for a company to join the scheme. All applications must be made to HM Revenue and Customs.<\/p>\n<p><strong>Note<\/strong>: Consult an accountant or <a href=\"\/rules\/employment\/taxation\/income-tax\/help-and-advice\/\">tax advise<\/a>r to find out if the Flat Rate VAT Scheme is right for your business.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>How to Join or Leave the Scheme<\/h2>\n<p><\/p>\n<h3>Joining the Scheme<\/h3>\n<p>You must check your company&#8217;s eligibility before you apply to join. As a rule, joining the scheme takes place:<\/p>\n<ul>\n<li>When you <a href=\"\/rules\/employment\/taxation\/vat\/registration\/\">register for VAT<\/a> online.<\/li>\n<li>By postal methods using the form &#8216;<a href=\"https:\/\/www.gov.uk\/government\/publications\/vat-application-to-join-the-flat-rate-scheme-vat600frs\" target=\"_blank\" rel=\"noreferrer noopener\">VAT600FRS<\/a>&#8216; sent to the address written on the form.<\/li>\n<li>When applying for the Annual Accounting Scheme using the form &#8216;<a href=\"https:\/\/www.gov.uk\/government\/publications\/vat-application-to-join-the-annual-accounting-and-flat-rate-scheme-vat600aafrs\" target=\"_blank\" rel=\"noreferrer noopener\">VAT600AA\/FRS<\/a>&#8216; (e.g. by emailing it to frsapplications.vrs@hmrc.gov.uk).<\/li>\n<\/ul>\n<p>HMRC will confirm that your application got accepted by post &#8211; if you did not apply online. Otherwise you will see the confirmation in your VAT online account.<\/p>\n<h3>Leaving the Scheme<\/h3>\n<p><img decoding=\"async\" style=\"float: right\" src=\"\/wp-content\/uploads\/2023\/06\/flat-rate-vat-scheme.jpg\">If a company is no longer eligible they must leave the scheme. A business can leave the scheme at any time if they believe it is no longer beneficial for them.<\/p>\n<p><strong>HM Revenue and Customs<\/strong><br \/>\nImperial House<br \/>\n77 Victoria Street<br \/>\nGrimsby<br \/>\nLincolnshire DN31 1DB<\/p>\n<p>Write to HMRC telling them the company is leaving the scheme. They will then confirm a leaving date for you. If the company wants to rejoin the scheme, they must wait twelve (12) months after the leaving date.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>Flat Rate VAT Scheme Eligibility Criteria<\/h2>\n<p>To join the Flat Rate Scheme the company must be a <a href=\"\/rules\/business\/tax\/vat-businesses\/\">VAT-registered business<\/a>. The company&#8217;s expected taxable turnover, excluding VAT, must also be \u00a3150,000 or less in the next year.<\/p>\n<p><strong>Note<\/strong>: The <a href=\"\/rules\/employment\/taxation\/vat\/calculate-taxable-turnover\/\">VAT taxable turnover<\/a> relates to all goods and services sold &#8211; that are not tax exempt.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>VAT Flat Rate Scheme Exceptions<\/h2>\n<p>A business will not qualify for the scheme if:<\/p>\n<ul>\n<li>They left the scheme in the previous twelve months.<\/li>\n<li>It committed a tax offence in the last twelve months (such as tax evasion).<\/li>\n<li>It has joined, or are eligible to join, a VAT group in the last two years.<\/li>\n<li>It registered as a VAT business division in the last two (2) years.<\/li>\n<li>The business has <a href=\"https:\/\/www.gov.uk\/government\/publications\/vat-notice-733-flat-rate-scheme-for-small-businesses\/vat-notice-733-flat-rate-scheme-for-small-businesses#what-if-my-business-is-closely-linked-with-another-business\" target=\"_blank\" rel=\"noreferrer noopener\">close associations with another business<\/a>.<\/li>\n<li>It joins a capital goods or margin VAT scheme.<\/li>\n<\/ul>\n<p>A company cannot use the <a href=\"\/rules\/employment\/taxation\/vat\/cash-accounting-scheme\/\">Cash Accounting Scheme<\/a> with the VAT Flat Rate Scheme. Instead, it uses its own cash-based method to calculate the turnover in the Flat Rate Scheme. See &#8216;section 9 of the VAT Notice 733&#8217;.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<h2>When You Must Leave the Scheme<\/h2>\n<p>All businesses must leave the scheme any time:<\/p>\n<ul>\n<li>They no longer meet the eligibility criteria for staying in it.<\/li>\n<li>In the first year in the scheme the company&#8217;s total income, including VAT, is more than \u00a3230,000.<\/li>\n<li>The company expects their income in the next twelve months to exceed \u00a3230,000.<\/li>\n<li>The expected total income will exceed \u00a3230,000 in the next month alone.<\/li>\n<\/ul>\n<p><strong>Note<\/strong>: Check the process for working out the <a href=\"\/rules\/employment\/taxation\/vat\/flat-rate-scheme-percentages\/\">flat rate scheme percentages 2022<\/a>. There are periodic changes so you must use the most current proportions.<\/p>\n<p><\/p>\n<hr>\n<p><\/p>\n<div class=\"updated-data\"><strong>Flat Rate VAT Explained for Small Businesses in United Kingdom<\/strong><br \/>\n<time datetime=\"2022-01-01\">Last Updated 2022<\/time><\/div>\n","protected":false},"excerpt":{"rendered":"<p>FLAT RATE SCHEME: All VAT registered businesses report the amount of VAT paid on purchases and the amount charged to customers. The difference in these amounts will either get paid to, or claimed from, HM Revenue and Customs. But, the VAT Flat Rate Scheme is different: Payments to HMRC will be at a fixed rate&hellip; <a class=\"more-link\" href=\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/vat\/flat-rate-scheme\/\">Continue reading <span class=\"screen-reader-text\">VAT Flat Rate Scheme Explained | Flat Rate Changes 2022<\/span><\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"parent":3470,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"inline_featured_image":false,"footnotes":""},"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v22.2 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>VAT Flat Rate Scheme Explained | Flat Rate Changes 2022 - UK Rules<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.theukrules.co.uk\/rules\/employment\/taxation\/vat\/flat-rate-scheme\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"VAT Flat Rate Scheme Explained | Flat Rate Changes 2022 - UK Rules\" \/>\n<meta property=\"og:description\" content=\"FLAT RATE SCHEME: All VAT registered businesses report the amount of VAT paid on purchases and the amount charged to customers. 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