Following last years Autumn Statement, the government have issued their draft legislation detailing the changes to the Flat Rate Scheme (FRS). These will come into effect on 1 April 2017.
If you are using the Flat Rate scheme for calculating your VAT it’s really important that you read the following information. We will also be contacting you directly if our records indicate that you may be affected by these significant changes.
If your business is classed as a “Low or Limited cost trade”, which will probably catch any consultancy based businesses, the flat rate will increase to 16% from 1 April.
So for example:
If your sales are £5,000 the VAT is £1,000, total £6,000 x 16.5% = £990 VAT payable. So HMRC let you keep £10.
Compare to the 14% rate and the VAT payable would have been £840, allowing you to keep £160.
Please click here for our full factsheet on this important subject and do get in touch with us if you are affected.