Flat Rate VAT Schemes

Flat rate VAT solutions Alexander Accountancy Burton

Flat Rate VAT Schemes – Are you a “limited cost trader”? In April 2017 new changes take effect that will change the rates used by many businesses that are registered for Flat Rate VAT Schemes. If you are not on the right scheme it could result in you paying a lot more VAT than you need to.

Do you know what a “limited cost trader” is?

This is a new definition that has been brought about due to proposals in the Autumn Statement of 2016. It refers to any business where the VAT inclusive expenditure on goods is less than 2% of the VAT inclusive turnover, or less than £1,000, during the prescribed accounting year.

The qualifying expenditure excludes capital expenditure, food and drink purchased for consumption, vehicles and vehicle costs, gifts, services etc. So your qualifying expenditure can be a lot less than you may think.

Anyone classified as a limited cost trader will need to pay Flat Rate VAT of 16.5%. This could be a significant increase above the rates currently used to calculate Flat Rate VAT and is expected to mainly hit service providers and consultants.

If you are unsure if or how this may affect you Alexander Accountancy are happy to offer a free review and outlined how you may be affected.

Please remember this new legislation comes in to place for services provided from 1st April 2017, so it makes sense to check you are going to be on the best VAT scheme for you and your business.

If you would like to book a free meeting to assess how you could be affected please telephone Burton on Trent 01283 743851 or email in**@al*******************.uk.