Flat Rate VAT: The New Percentage for Limited Cost Businesses

by | Mar 21, 2017

Flat Rate VAT: The New Percentage for Limited Cost Businesses

Changes from April 1st 2017 will affect ‘limited cost’ businesses. Limited cost businesses will have to increase their flat rate percentage to 16.5%, instead of the current 11% – 14.5% rates.

shutterstock_323456630-1.jpg

 

Changes from April 1st 2017 will affect ‘limited cost’ businesses. Limited cost businesses will have to increase their flat rate percentage to 16.5%, instead of the current 11% – 14.5% rates.

 


IS MY BUSINESS A ‘LIMITED COST’ BUSINESS?

Yes, if your VAT inclusive ‘goods’ expenditure is less than 2% of your turnover in an accounting period or greater than 2% but less than £1,000.

 


WHAT COUNTS AS ‘GOODS’?

‘Goods’ do not include:
– any services 
– daily expenses such as travel and accommodation
– subsistence costs
– vehicle costs including fuel 
– rent, internet, phone bills and accountancy fees
– gifts, promotional items and donations
– goods you will resell or hire out unless this is your main business activity
– training and memberships
– capital items for example laptops, furniture, office equipment, mobile phones and tablets

 


WHAT IS THE NEXT STEP FOR ME?

If SRK currently prepare your VAT return, we will be in touch when your next VAT return is due for preparation with the best option going forward. 

Depending on your turnover and expenses you will remain on the FRS scheme at 16.5% or change to the normal scheme effective from 1st April 2017.

 


 

WHAT TO DO IF I STILL HAVE QUESTIONS?

If you are an SRK Accounting customer and you’d like to speak to us regarding this in advance of your next VAT return please contact your dedicated associate or email us at support@srkaccounting.com

If you are not an SRK Accounting customer you can contact us. We’d also love to support you through this by offering you a free consultation.

FREE CONSULTATION

What do you think of the HMRC VAT changes?  Leave your comments below!

Do you know which areas of your business are underperforming? Take our GROWTH assessment and we’ll send you a tailored growth plan for free.