As you may be aware, the flat rate scheme for VAT is changing from 1 April 2017.
HMRC are introducing a 16.5% additional flat rate for. This rate will apply any business where they have limited costs.
If you do qualify as a limited cost business, it’s likely that remaining on the flat rate scheme will be less cost effective.
There are a few options including: –
- Changing to the standard vat scheme – this means that you pay over the VAT on your sales invoices but you can reclaim VAT paid on your vat-able business expenses.
- Deregister for VAT – if your turnover is below the VAT de-registration threshold, it may be advantageous for you to de-register from VAT. There are other practical implications to consider, such as customer perception etc.
If you don’t have limited costs, you won’t be affected and can continue using the original flat rate percentage.
Please get in touch if you want any guidance on the flat rate scheme for VAT.