Vat Flat Rate News

[elaine@cheapaccounting]

Anyone on vat flat rate:

[FONT=verdana,helvetica,arial,sans-serif] The flat rate scheme provides an optional simplified VAT arrangement for businesses with a turnover up to £150,000. The percentages were re-calculated in December 2008 to reflect the temporary reduction in the standard rate of VAT. The flat rate percentages have now been re-calculated to reflect the reversion of the standard rate of VAT to 17.5%. The new rates will be implemented on 1 January 2010.
They also include technical adjustments to reflect more up to date business patterns. This means that, for some sectors, the rates will not simply return to the level set prior to the December 08 changes. Virtually all sectors will face an increase (as a result of the increase in the standard rate) but some sectors’ increases will be bigger than others’. This is consistent with the approach adopted last year when the standard rate went down. It should also be noted that from January over two thirds of users have a lower rate or the same rate as they did last December when the flat rates changed to reflect the 15% VAT rate.
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[Maslins]

The flat rate VAT percentages from 1 Jan 2010 onwards:

http://www.hmrc.gov.uk/vat/start/schemes/flat-rate.htm#5a

 

[Postforce]

Thanks for posting that - Yep! - my sector has gone up higher than it previously was. :redface:

 

[elaine@cheapaccounting]

And here is a comparison:

http://www.cheapaccounting.co.uk/news/frs010110.pdf

 

[GeorgeF]

Just wondering whether to elect for flat-rate VAT.....

For my sector the flat rate is 10.5%.

17.5%-10.5% = 7%. 7%/17.5% = 0.4

So, let's say my sales are £100,000, I should elect for flat rate VAT if I am paying VAT on less than £40,000 worth of stuff each year, is this right?

I pay out around £30,000 on rent and advertising - that's it. Rest of my costs are wages.

So my effective VAT payout is £70,000 x 0.175 = 12,250.

But if i elect for the flat rate = £10,500

might actually have to do this....

 

[Jaydee]

might actually have to do this....

Be careful George - on the figures you have quoted you will actually be worse off as the FRS is calculated on the gross sales, not the net and £100,000 x 1.175 x 10.5% = £12,337.50 - so £87.50 worse off by changing over - subject of course to the accuracy of your guesstimates.

 

[elaine@cheapaccounting]

Mistake often made - flat rate vat is on the gross sales i.e. sales plus vat charged.

 

[Brsln2]

Thank you all for updating about the new flat rate VAt rates. I thought they were going back to what they were before December 08.

 

[GreenLaser]

Yeah I have had Half percent thrown on my sector too ...nice new little stealth tax thrown in there again