New Changes for the Flat Rate VAT Scheme
As of 1st April 2017, there will be new changes coming into effect for the Flat Rate VAT Scheme.
The Flat Rate VAT Scheme (FRS) is a simplified accounting scheme for small businesses, and currently a business’s flat rate percentage is determined by reference to their trade sector.
In addition to this, from 1st April 2017, Flat Rate Scheme businesses must also establish whether they meet the definition of a limited cost trader, which will be included in new legislation.
The new 16.5% Flat Rate VAT Scheme is being introduced for businesses deemed as being limited cost traders. HMRC
define limited cost traders as a trader whose VAT inclusive expenditure on goods is either:
* Less than 2% of their VAT inclusive turnover in an accounting period.
* Greater than 2% of their VAT inclusive turnover, but less than £1000 per annum.
Note – Goods for the above mentioned exclude capital expenditure, food and drink, vehicles and vehicle parts and fuel (except for businesses which carry out transport services).
If you have any questions and want to find out more about the new Flat Rate Scheme, then feel free to contact Wendy Adams here at Ad Valorem who will be happy to help you with any of your queries.
Ad Valorem Accountancy Services