New flat Rate VAT + 1st Year Discount

[Andrew@Wisteria]

You should also factor that you can claim vat on your pre-vat registration expenses (6 months for services and 4 years on capital items) on your first vat return even if on the flat rate.

Just to add that these need to still be in use and no longer require discounting for the fall in value between purchase and introduction to the business.

[l35kee]

Right, it's from date of registration, so that will end 26/02/2018. Thanks for all the advice, much appreciated.

[Neil@Intouch]

I am registered yep. So the date is from first contract, not company incorporation? I didn't register for VAT until Feb.

Depends on the VAT registration effective date. If this was from the contract start date, then you will get the 1% discount for the full year from this date.

[l35kee]

You should also factor that you can claim vat on your pre-vat registration expenses (6 months for services and 4 years on capital items) on your first vat return even if on the flat rate.

Did not know that, I registered the company back in September last year while still a permie, currently just about a month into my first contract.

Thanks for clarifying. Are you VAT registered at all? If not, and you have only just started your first contract, it would be beneficial to register for VAT on the flat rate scheme from the date you started your first contract. Then you get the full year discount from this date.

I am registered yep. So the date is from first contract, not company incorporation? I didn't register for VAT until Feb.

[Neil@Intouch]

Thanks, this is helpful. May have been less clear in my original post but I haven't yet registered for it. I'm a couple weeks into my first contract, with all the start up costs (laptop, office equipment, etc) it was worth not bothering at least until the end of FY. Very clear on what to do come April now anyway!

Thanks for clarifying. Are you VAT registered at all? If not, and you have only just started your first contract, it would be beneficial to register for VAT on the flat rate scheme from the date you started your first contract. Then you get the full year discount from this date.

[Chart Accountancy]

You should also factor that you can claim vat on your pre-vat registration expenses (6 months for services and 4 years on capital items) on your first vat return even if on the flat rate.

[l35kee]

Even with the discount it could be borderline, you really need to try and work out how much input VAT you will incur between now and your discount expiring to be certain.

Yeah, I'll have to sit down and figure it out. If it's about the same, part of me thinks to not bother registering for it. I have a relatively clear idea about my expenses now.

Based on the £400 day rate, over 46 weeks, you would charge VAT to your agency/end client of £18,400 and on the 16.5% flat rate scheme pay £18,216 to HMRC. A massive saving of £184. Therefore being on the standard rate VAT scheme would be more beneficial for you.

As your Accountant has said, it would be beneficial to continue on the flat rate scheme until the end of your 1% discount, as this would be around £600 extra profit until this point. Depending on the exact date your 1% discount ends.

Thanks, this is helpful. May have been less clear in my original post but I haven't yet registered for it. I'm a couple weeks into my first contract, with all the start up costs (laptop, office equipment, etc) it was worth not bothering at least until the end of FY. Very clear on what to do come April now anyway!

[TheCyclingProgrammer]

Even with the discount it could be borderline, you really need to try and work out how much input VAT you will incur between now and your discount expiring to be certain.

[Neil@Intouch]

Based on the £400 day rate, over 46 weeks, you would charge VAT to your agency/end client of £18,400 and on the 16.5% flat rate scheme pay £18,216 to HMRC. A massive saving of £184. Therefore being on the standard rate VAT scheme would be more beneficial for you.

As your Accountant has said, it would be beneficial to continue on the flat rate scheme until the end of your 1% discount, as this would be around £600 extra profit until this point. Depending on the exact date your 1% discount ends.

[l35kee]

Hi guys,

Hoping someone could put this into perspective for me. I'm eligible for the 1% discount on the flat rate VAT scheme until Sept this year, which puts me at 15.5%. I'l be putting through approx 20 miles a day, ipse+ membership, lunches and 2 x mobile phone contracts (lets say £45 each).. Current contract is £400 pd.

edit: Accountant fees at £120 pm +vat too!

My accountant says I'd be typically better off on the flat rate until my discount ends, but I gather it's a lot easier for them not having to bother with me being off the flat rate...

Cheers!