From 1st April 2017, the Flat Rate VAT Scheme changes for certain businesses.
Businesses who are classed as ‘low cost traders’ will see their Flat Rate Percentage increase to 16.5%.
Low cost traders are those who either have expenses less than 2% of their turnover or have less than £1000 worth of expenses per year. Some expenses are not included in these calculations, such as: Fuel, Food/Drink, Vehicle costs and Capital expenses.
There are a few options for ‘low cost traders’ with the new rate coming into play:
1.You can move onto the new percentage from 1st April, and nothing further needs to be done 2.You can write to HMRC to move onto standard VAT, where instead of just paying over a lesser percentage of your Gross Sales, you claim 20% VAT on your Net Sales and also pay 20% on your expenses – the difference is then paid over to HMRC or refunded to you 3.You can cancel your VAT Registration altogether, by completing the necessary form
If you would like to discuss these changes or which option may be best for you, please call us on 01530 414 285 or email firstname.lastname@example.org