There are new rules for the Flat Rate Scheme.  For small traders with an annual turnover of less than £150,000 can opt to use the Flat Rate Scheme

For example, if your Flat Rate percentage was 11% then you would still charge your customers 20% but you would only need to pay 11% to HMRC

About HRMC Flat Rate VAT

However, new rules being introduced from 1 April 2017 could result in you having to pay 16.5%. An increase of 5.5% in our example!

Why?

Well, you will need to determine whether you fall within a new category called “limited cost trader.”

A limited costs trader is where the VAT inclusive expenditure on goods for business in a prescribed accounting period is less than 2% of VAT inclusive turnover, or is more than 2% but less than £1,000 a year.

If you fall within the definition of a limited cost trader, then you will need to use 16.5% regardless of the percentage you are currently using

If you have any questions in respect of the above then please do not hesitate to email me at kevin@kwaccounting.com or why not explore some of my other blogs at kwaccounting.com