If you are currently using the Flat Rate scheme then there is some important information below on how recent changes may affect you.
You may be aware that HM Revenue & Customs are making changes to the VAT Flat Rate Scheme which may affect you. As from 1st April 2017, if you are deemed to be a limited cost trader your Flat Rate percentage is changing to 16.5%.
You will be deemed to be a limited cost trader if your VAT inclusive expenditure on goods for your business in an accounting period is less than 2% of turnover, including VAT, or less than £1,000 per annum. Limited cost traders will have to use a flat rate percentage of 16.5% regardless of the type of the business.
This higher flat rate percentage will eliminate any savings the scheme has previously delivered to you.
You will need to decide whether to:-
- Remain on the Flat Rate Scheme and apply the higher percentage from 1 April 2017
- Exit the Flat Rate Scheme and account for VAT in the normal way
- Deregister for VAT if your turnover is under the de-registration threshold (currently £81,000)
We understand that this is an important decision for your business and appreciate that accounting for VAT in the normal way is more complex and time consuming. We therefore offer a range of services to help you with this should you require assistance completing your VAT returns.
Please do not hesitate to call us on (024) 7638 4171 to discuss the options available to you.