United Kingdom · VAT for small businesses

VAT flat rate scheme calculator.

Choose your type of business, enter your VAT-inclusive turnover and the goods you buy. See your flat rate, what you would pay on the scheme and what standard VAT accounting would cost instead.

On the Flat Rate Scheme you pay a set percentage of your VAT-inclusive turnover, using the rate for your type of business. You pay the higher 16.5% if you are a limited cost business (goods under 2% of turnover or £1,000 a year), and you get 1% off in your first year of VAT registration.

GOV.UK VAT Flat Rate Scheme ratesStandard rate 20%Verified October 4, 2026

Your business

Annual turnover including VAT (£)

Type of business

Pick the closest match. GOV.UK says a business with mixed activities should check which rate applies.

Goods you buy for the business each year, including VAT (£)

Goods only: not services, rent, utilities, vehicle fuel or food for you and your staff. See GOV.UK for what counts as limited cost goods.

VAT you would reclaim on all purchases under standard VAT (£)

Used only for the standard VAT comparison.

In my first year of VAT registration (1% discount)

Your estimate

How the Flat Rate Scheme works

GOV.UK says the flat rate you use usually depends on your business type, and that you get a 1% discount if you are in your first year as a VAT-registered business. You are a limited cost business if your goods cost less than either 2% of your turnover or £1,000 a year (if your costs are more than 2%), and then you pay a higher rate of 16.5%.

Formulas: scheme VAT = VAT-inclusive turnover × flat rate. Standard VAT (all sales at 20%) = turnover × 20 ÷ 120 − the VAT you can reclaim on purchases. The limit for the limited cost test is the greater of 2% of VAT-inclusive turnover and £1,000.

Worked example

VAT-inclusive turnover of £60,000 for a management consultancy-type business in its first year of registration, with £10,000 of goods and £1,200 of VAT reclaimable. Sector rate 14%, less 1% = 13%; scheme VAT is £7,800. Standard VAT is £10,000 − £1,200 = £8,800. The scheme saves about £1,000. A different sector or goods under £1,200 changes the answer, which is why you should run your own numbers.

Flat rates by type of business

The drop-down lists the 54 rates GOV.UK shows from 1 April 2022, for example catering 12.5%, hotels 10.5% and pubs 6.5%. The temporary reduced rates that applied between July 2020 and March 2022 are not used.

What this page does not do

It does not check whether you can join or stay on the scheme; GOV.UK sets eligibility rules and a turnover test.
It assumes every sale is standard-rated at 20%. Zero-rated, reduced-rate and exempt sales change both calculations.
On the scheme you generally cannot reclaim VAT on purchases, except for certain capital assets; the input VAT field here is for the standard comparison only.
Which flat rate applies to a business with mixed activities is a decision for you and HMRC, not this page.

Official sources: GOV.UK, VAT Flat Rate Scheme: work out your flat rate and GOV.UK, VAT rates (standard rate 20%), read October 4, 2026.

Frequently asked questions

What is a limited cost business?

One whose goods cost less than 2% of its VAT-inclusive turnover, or less than £1,000 a year if 2% is lower. It pays a flat 16.5% instead of its sector rate.

Does the 1% first-year discount stack with the limited cost rate?

The page applies the 1% reduction to whichever rate you pay. Check the GOV.UK guidance for your circumstances.

Do I charge customers the flat rate?

No. You charge customers VAT at the normal rate for your sales and pay HMRC the flat percentage of your VAT-inclusive turnover.

Can I reclaim VAT on purchases on the scheme?

Generally not, apart from some capital assets. The page therefore compares the scheme with standard accounting where you do reclaim it.

Estimate only

This page is educational and is not tax advice. Scheme eligibility and rules can change; confirm with HMRC or an accountant before joining or leaving. Calculations run in your browser; nothing is sent anywhere.