2026-27 · VAT Calculator

VAT Flat Rate Scheme Calculator

Is the VAT Flat Rate Scheme profitable for your company? Enter your sector and turnover to find out how much you keep — or lose — versus standard VAT accounting.

Your details

Annual VAT-exclusive turnover (£)

Your revenue before adding VAT — what you invoice your clients net of VAT

Business sector

First year of VAT registration (−1% discount)Limited cost trader (goods spend <2% turnover → 16.5% applies)

Annual FRS profit

£2,080

Flat rate applied

14.5%

Breakdown

VAT-exclusive turnover£80,000

VAT-inclusive turnover (×1.20)£96,000

VAT collected from clients (20%)£16,000

VAT paid to HMRC (14.5% of incl. turnover)£13,920

Annual surplus kept£2,080

Per quarter£520

How it works

1
Charge clients standard VAT (20%)
You invoice clients at 20% VAT on top of your fee. This is collected and held in your company account until you pay HMRC.
2
Pay HMRC your flat rate percentage
Instead of paying all 20%, you pay your sector flat rate on your VAT-inclusive turnover. The difference is yours to keep.
3
The surplus is taxable income
The FRS profit is subject to corporation tax — but it still represents a net benefit versus standard accounting for most low-expense businesses.
4
Watch the limited cost trader rule
If your goods purchases are under 2% of turnover, HMRC applies a flat rate of 16.5%, which often makes FRS uneconomic for pure service companies.

HMRC sources

VAT Flat Rate Scheme (gov.uk)VAT Flat Rate Scheme percentages by sector Limited cost trader rules (HMRC)

Disclaimer: For illustrative purposes only. VAT treatment depends on your specific business activities. Confirm your sector rate and limited cost trader status with a qualified VAT adviser or HMRC before registering.

FAQs

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