Flat Rate VAT changes coming in from 1st April 2017.
A new category of 16.5% is being introduced for any scheme users who have minimal costs during the VAT period.
What does it mean to me?
The 16.5% category will apply to any scheme user that spends less than 2% of its gross sales on goods or less than Â£250 in a VAT quarter.
There are specific exclusions in the definition of goods that can been found below.
This means you will have to pay more VAT each quarter if your goods costs are low. You will have to change the current percentage used to calculate your liability and change it to the new 16.5%
Certain costs are not included when calculating the 2% or Â£250 level of spending, you can not include the following:
- Motor expenses, including fuel (Unless your main trade in Transport based)
- Capital Items (Computers, Tools, Vehicles, etc)
- Telephone & Internet costs
- Rent & Services costs
For any clients we act for who operate on the Flat Rate scheme, we will look at each individual case and calculate if we need to change the percentage used.
We can then look at whether staying on the scheme is still beneficial or if going back to standard VAT may be more suitable.
If you have any questions regarding the change, please Contact Us.