VAT Flat Rate Scheme Calculator: Would You Save by Joining?
Put in the VAT rate you charge, your yearly turnover, your sector's flat rate and your costs. The calculator works out the VAT you would owe each way and tells you which is cheaper, and by how much.
Tax year 2026/27 · Estimates, not personal tax advice
Find the percentage for your business type on GOV.UK. Ignored if you're a limited cost trader.
Goods used only for the business. Not services, fuel, food for staff, or capital items.
Services, software, rent and so on that carry VAT at 20%.
Flat Rate Scheme saves you
£144
| Turnover excluding VAT | £72,000.00 |
| Turnover including VAT at 20% | £86,400.00 |
| Output VAT on sales (standard accounting) | £14,400.00 |
| Less VAT reclaimed on costs | £0.00 |
| VAT due under standard accounting | £14,400.00 |
| VAT due under Flat Rate Scheme (16.5%) | £14,256.00 |
The saving is £12 a month on average. Standard accounting only becomes cheaper once you reclaim more than £144 of VAT a year on costs; you are reclaiming £0.
Your goods spend is below 2% of VAT-inclusive turnover (or £1,000), so you must use the 16.5% limited cost trader rate rather than your sector rate.
Assumes your costs carry VAT at 20% and leaves out capital purchases over £2,000, which can still be reclaimed under the scheme.
Rates and rules used
Tax year 2026/27Default year 2026/27 (6 April to 5 April). 2025/26 and 2024/25 figures are kept for comparison where the calculator offers a year choice.
- UK VAT rates (20%, 5% and 0%)2026/27GOV.UK: VAT rates (opens in new tab)
- Flat Rate Scheme joining and leaving limits, limited cost trader rate and 1% first-year discount2026/27GOV.UK: VAT Flat Rate Scheme (opens in new tab)
- Flat rate percentages by business type2026/27GOV.UK: Flat rates by business type (opens in new tab)
Independent site, not affiliated with HMRC. Always check GOV.UK for the latest figures.
How this calculation works
- 01Turn your turnover into a VAT-inclusive figure at the rate you charge.
- 02Standard accounting: output VAT minus the VAT you reclaim on costs.
- 03Flat Rate Scheme: your flat rate (or 16.5% for a limited cost trader) times VAT-inclusive turnover.
- 04The difference is your yearly saving or extra cost.
Real payroll can differ because tax and NI are worked out per pay period, and your tax code may include adjustments HMRC hasn't told you about. See our methodology.
How the two methods differ
With standard VAT accounting you charge VAT on sales, reclaim the VAT on your costs and pay HMRC the difference. With the Flat Rate Scheme you still charge your customers the normal rate, but you pay HMRC a fixed percentage of your VAT-inclusive turnover and, in general, you don't reclaim VAT on purchases.
That makes the scheme simpler. It tends to save money when your costs are low, and cost money when you buy a lot of VAT-able goods and services.
The limited cost trader rule
If your spend on goods is under 2% of your VAT-inclusive turnover, or under £1,000 a year, you are a limited cost trader and must use 16.5% whatever your sector rate says. Services, fuel for your own vehicle, food and drink, and capital items don't count as goods for this test.
Because 16.5% is high, many service businesses with few costs find the scheme saves them nothing. Check the result with your goods spend entered carefully.
Understanding your vat flat rate scheme calculator result
The headline shows how much less (or more) VAT you would pay HMRC over a year under the Flat Rate Scheme than under standard accounting. A positive saving means the scheme is cheaper for you; if standard accounting is cheaper the headline says so. The break-even figure shows how much VAT you would need to be reclaiming on costs before standard accounting wins.
A consultant with very few costs
Scenario: A consultant charges 20% VAT and turns over £72,000 including VAT. They spend £400 on goods and £1,200 including VAT on other costs, and the sector rate is 14.5%.
How to use the result: Goods spend is under £1,000, so they are a limited cost trader at 16.5%, giving £11,880 under the scheme. Standard accounting is £12,000 output VAT minus about £267 reclaimed on £1,600 of costs, or £11,733, so standard returns are £147 cheaper.
Details to check before relying on the estimate
- Check your flat rate on GOV.UK for your exact business type.
- Only goods used solely in the business count towards the limited cost test.
- The calculator assumes your costs carry VAT at 20% and ignores capital purchases over £2,000, which you can still reclaim under the scheme.
Putting the estimate into perspective
Test a range of plausible turnover and cost figures rather than choosing a scheme from one forecast. A projected saving does not establish eligibility or replace checking how your actual purchases are treated.
Frequently asked questions
Which VAT rate should I enter?
Enter the rate you charge on most of your sales: 20% for most goods and services, 5% for reduced-rate items or 0% if your sales are zero-rated. The calculator uses it to work out the output VAT under standard accounting.
Check it on GOV.UK: VAT rates (opens GOV.UK in a new tab) · VAT Flat Rate Scheme (opens GOV.UK in a new tab)
Where do I find my flat rate percentage?
GOV.UK lists a percentage for each type of business. Pick the one that best describes what you do and enter it in the flat rate box.
Check it on GOV.UK: VAT rates (opens GOV.UK in a new tab) · VAT Flat Rate Scheme (opens GOV.UK in a new tab)
Does the Flat Rate Scheme always save money?
No. It saves money when your VAT-able costs are low compared with your sales, because you give up reclaiming VAT on purchases. If you buy a lot of goods and services with VAT on them, standard accounting can be cheaper.
Check it on GOV.UK: VAT rates (opens GOV.UK in a new tab) · VAT Flat Rate Scheme (opens GOV.UK in a new tab)
What is a limited cost trader?
A business that spends less than 2% of its VAT-inclusive turnover on goods, or under £1,000 a year if that is greater, in the period. It must use 16.5% instead of its sector flat rate.
Check it on GOV.UK: VAT rates (opens GOV.UK in a new tab) · VAT Flat Rate Scheme (opens GOV.UK in a new tab)
Is the flat rate charged on turnover with or without VAT?
On VAT-inclusive turnover. You still charge customers VAT at the normal rate, then pay HMRC the flat rate percentage of the total you invoiced including that VAT.
Check it on GOV.UK: VAT rates (opens GOV.UK in a new tab) · VAT Flat Rate Scheme (opens GOV.UK in a new tab)
Who can join the Flat Rate Scheme?
You can join if you expect your VAT taxable turnover to be £150,000 or less excluding VAT in the next 12 months. You must leave once your VAT-inclusive turnover goes above £230,000.
Check it on GOV.UK: Income Tax rates and allowances (opens GOV.UK in a new tab)
Related calculators
- VAT Calculator — Add or remove VAT and check the registration threshold.
- Self Employed Tax Calculator — See Income Tax and NI on the profit left after VAT.
- Corporation Tax Calculator — Work out tax on your company's profit.
Related guides
- VAT Explained: Rates, Registration and the Flat Rate Scheme — A plain-English guide to UK VAT: the three rates, when you must register, how to add and remove VAT, and whether the Flat Rate Scheme suits you.
- Tax for the Self-Employed — How sole traders are taxed in the UK: Income Tax on profit, Class 4 NI, allowable expenses and payments on account.
- Corporation Tax Explained — How UK limited companies pay Corporation Tax: the 19% small profits rate, 25% main rate, marginal relief between £50,000 and £250,000, and how VAT fits alongside it.