Flat Rate VAT scheme – Rates payable by sector

Knowledge base from Boox

By Jonathan London on 4th February 2014

Flat Rate VAT scheme – Rates payable by sector

Most contractors and freelancers, and in particular those with low VAT rated expenses, opt for the Flat Rate VAT Scheme (FRS). This allows you to charge your clients the full 20% VAT rate on your outgoing invoices, yet pay HMRC a lower rate – and keep the difference.

Flat Rate VAT rates

The rate you pay HMRC will depend on your business category as shown in the table below.

Business category

Percentage you pay to HMRC

Accountancy or book-keeping

14.5

Advertising

11

Agricultural services

11

Any other activity not listed elsewhere

12

Architect, civil and structural engineer or surveyor

14.5

Boarding or care of animals

12

Business services that are not listed elsewhere

12

Catering services including restaurants and takeaways

12.5

Computer and IT consultancy or data processing

14.5

Computer repair services

10.5

Dealing in waste or scrap

10.5

Entertainment or journalism

12.5

Estate agency or property management services

12

Farming or agriculture that is not listed elsewhere

6.5

Film, radio, television or video production

13

Financial services

13.5

Forestry or fishing

10.5

General building or construction services

9.5

Hairdressing or other beauty treatment services

13

Hiring or renting goods

9.5

Hotel or accommodation

10.5

Investigation or security

12

Labour-only building or construction services

14.5

Laundry or dry-cleaning services

12

Lawyer or legal services

14.5

Library, archive, museum or other cultural activity

9.5

Management consultancy

14

Manufacturing fabricated metal products

10.5

Manufacturing food

9

Manufacturing that is not listed elsewhere

9.5

Manufacturing yarn, textiles or clothing

9

Membership organisation

8

Mining or quarrying

10

Packaging

9

Photography

11

Post offices

5

Printing

8.5

Publishing

11

Pubs

6.5

Real estate activity not listed elsewhere

14

Repairing personal or household goods

10

Repairing vehicles

8.5

Retailing food, confectionary, tobacco, newspapers or children’s clothing

4

Retailing pharmaceuticals, medical goods, cosmetics or toiletries

8

Retailing that is not listed elsewhere

7.5

Retailing vehicles or fuel

6.5

Secretarial services

13

Social work

11

Sport or recreation

8.5

Transport or storage, including couriers, freight, removals and taxis

10

Travel agency

10.5

Veterinary medicine

11

Wholesaling agricultural products

8

Wholesaling food

7.5

Wholesaling that is not listed elsewhere

8.5

 

Remember, you will receive a 1% discount on your appropriate percentage throughout your first year on the Flat Rate VAT Scheme. The drawback is the only VAT you can claim back for your business expenses if you choose to join the FRS is on capital asset purchases with receipt values over £2,000.

If your annual turnover exceeds £230,000 in VAT inclusive revenue, you won’t qualify for the scheme.

At Boox, we can advise you on your VAT options and help you maximise profitability and improve cash flow.  VAT Registration and Guidance are included as part of our monthly online accounting service, along with your quarterly VAT returns.

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