Will your VAT Flat Rate increase in April?
12th Apr 2017
HMRC’s Flat Rate VAT scheme is very popular with small businesses, designed to simplify your records of sales and purchases it allows you to apply a fixed flat-rate percentage to your gross turnover to arrive at the VAT due.
Fixed-rate percentages vary depending on the nature of your business. The scheme was designed for businesses with a turnover no more than £150,000 a year, excluding VAT. However, HMRC feel that the scheme has been abused and used as a way to pay less VAT especially by businesses with virtually no costs and are looking to implement changes in April 2017 to combat the problems they are facing.
For Example: A Low or Limited Cost Trader would spend less than 2% on gross turnover, or less than £1000 on the purchase of goods.
From April 2017 HMRC is introducing a special 16.5% flat rate. Some of the businesses likely to be affected include:
• Accountancy and legal services 14.5%
• Journalism or entertaining 12.5%
• Computer or IT consultancy 14.5%
• Business services not listed elsewhere 12.0%
• Estate agents & property management 12.0%
• Management consultancy 14.0%
If you think these changes may affect your business, GRC Accountants can help you assess your options and ensure your business uses the correct VAT scheme to minimise your tax liability.
For impartial advice and review of your VAT tax liabilities, contact Gareth on 0151 321 2340.