VAT reduced to 15%

[kryten22uk]

IT Consultancy drops to 11.5%

Management consultancy drops to 11%

Accountancy drops to 11.5%

Nasty. So the FRS profit for IT reduced from 2.225% to 1.775%.

[MrsGoof]

they gain again
old scheme
Invoice £1000 keep £22.25 of tha vat for yourself

now
Invoice £1000 keep £17.75 of tha vat for yourself

get yer invoices out on Friday

[kryten22uk]

For you IT guys, the new 15% VAT rate means you pay out exactly what you receive in VAT; ie no margin for expenses (well you get 0.05%!). But those in the "Labour Only" rate of 13.5% actually have to pay out more VAT than they receive on invoices!

Where did you get 13.5% flat rate vat from? i pay 13% for 'computer and IT consultancy or data processing'

For "Labour Only" companies, as per my OP.

[kryten22uk]

they gain again
old scheme
Invoice £1000 keep £22.25 of tha vat for yourself

now
Invoice £1000 keep £17.75 of tha vat for yourself

get yer invoices out on Friday

Even worse for my category (Other Business Services); i've gone from £45.75 to £40.75.

[BoredBloke]

Surely the benefits of the FRS were marginal at best and this will push more people out of the FRS and back to the old way.

[Moscow Mule]

Surely the benefits of the FRS were marginal at best and this will push more people out of the FRS and back to the old way.

Nah. It's not going to cost any more, just profit a bit less. For me not working out inputs and outputs makes staying on it a no-brainer.

[Pickle2]

they gain again
old scheme
Invoice £1000 keep £22.25 of tha vat for yourself

now
Invoice £1000 keep £17.75 of tha vat for yourself

get yer invoices out on Friday

But you will be spending less on VAT too. If you invoice 1000, spend 100 inc vat on supplies, then there is another 2.50 (ish) you save. so your 17.75 should really be 20.25.

And if you dont spend much on supplies then FRS shceme is just free money anyway, so there is nothing to moan about.

[Starkraving]

Sneaky!

From the HMRC web site:



"My flat rate has not been reduced. Why not?"

The flat rate percentages are calculated by reference to the VAT actually paid in each sector and, following the change to the standard rate of VAT, most sectors will find that their flat rates are reduced. However, there are a small number of sectors that, with VAT at 17.5%, would have needed an increase in order to reflect the correct underlying rate for that sector. Following the rate change to 15%, those sectors have been left unchanged rather than increased.

I've noticed that my sector has been reduced by 2% instead of 2.5%

[TheFaQQer]

Nah. It's not going to cost any more, just profit a bit less. For me not working out inputs and outputs makes staying on it a no-brainer.

WHS - I do my VAT calculation four times a year, and all my expenses at year end because I'm so bad with filing.

FRS is a dream for me

[OrangeHopper]

But your accountant has to work out the Flat Rate Saving at the year end so someone still has to do the calculation.