Flat Rate VAT checker

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The limited cost test

You are a limited cost business when your spend on relevant goods, including VAT, is less than the greater of 2% of your turnover including VAT and £1,000 a year (£250 a quarter). Equal is not less. Spending exactly the limit is not limited cost: the test asks for less.

Leave out capital items. What counts is in VAT Notice 733.

The rate

A limited cost business uses 16.5% of its turnover including VAT, the rate since 1 April 2017. In the first 12 months of VAT registration it is 1 point lower, 15.5%, until the day before the first anniversary. There is no reduction if you applied to register, or were told you had to, more than a year after the date your registration took effect.

Per invoice, on the total including VAT

VAT is the rate times the total including VAT, per invoice. Using the net amount gives a wrong answer. Each invoice's VAT is rounded to the penny, half a penny up, and the rounded amounts are then added.

Enter the total including VAT. Credit note? Use a minus sign.

Which date to use

Use the date you were paid (for a card sale, the date of the sale). On the basic method, which counts turnover by invoice, use the tax point: often the invoice date, but not always, so check the rule below.

• When you are paid (the cash-based method, VAT Notice 733 paragraph 9.1): cash, the day you receive it; a cheque, the day you receive it or the date on it, whichever is later; a transfer, standing order or direct debit, the day your account is credited; a card payment, the day you make out the sales voucher, not the day the card provider pays you.
• By invoice (the basic method, VAT Notice 733 paragraph 8.1 and VAT Notice 700 paragraph 14.2): the tax point is the day you deliver the goods or finish the work. If you invoice or are paid before that day, it is whichever of those came first. Otherwise, if you invoice up to 14 days after that day, it is the invoice date. A longer period can be agreed in writing with the VAT Written Enquiries Team.
• When the rate changes, VAT Notice 733 paragraph 9.2 can be read as using the basic method's tax point on the cash-based method too. This checker uses the date you were paid, which can give the higher rate.

This checker is a guide, not tax advice, and Settledge is not an accountant. The rules are in VAT Notice 733.