Standard rate VAT scheme

On this scheme, you charge VAT on invoices (usually 20%) and pay this over to HMRC. You can reduce the amount you pay by claiming the VAT you pay on allowable expenses.

On this scheme, you have to keep track of the VAT you charge on your invoices, and also the VAT you pay on expenses.

If you earn over £85,000, you must register for VAT.

Learn more on gov.uk.

Flat rate VAT scheme

If you earn under £150,000, you can opt to use the flat rate scheme instead of the standard rate scheme.

It’s intended to be a simpler way to manage your VAT, as instead of keeping track of VAT on all income and expenses, there is a different calculation.

You still charge the relevant VAT rate on your sales (usually 20%). Then each VAT period, you add up your total sales including VAT, and multiply it by the relevant flat rate for your industry.

Learn more on gov.uk.

If you’re unsure, speak to your accountant. If you don’t have an accountant and would be like to speak to one, we can connect you with one here.

If you don’t yet have an accountant and need someone to take care of your VAT requirements, our accounting partner network can help. Follow the link below to complete a short contact form and a member of our team will be in touch!

getcoconut.com/accounting-enquiry

Did this answer your question?