VAT flat rate scheme
The measure
The VAT flat rate scheme allows small businesses to operate a simplified VAT system by paying VAT as a flat percentage of turnover (with the rates set according to business sector). These flat rate percentages for use by small businesses are to be recalculated. The new percentages take into account the change in the VAT rate back to 17.5% and reflect the latest data about VAT liabilities in each sector.
Who will be affected?
Small businesses with a turnover up to £150,000 that currently use, or are intending to use, the VAT flat rate scheme.
When?
1 January 2010.
By and large, the changes in the flat rate percentages are in line with what would be expected considering the VAT rate increase. Small businesses should be particularly aware of VAT accounting periods which span 1 January 2010, to ensure that the correct percentages are applied to turnover falling before and after the rate change.
