VAT Flat Rate Tax v Standard

[northernladuk]

At present, I am on the FRS AND I keep all my expenditure receipts.

Does that mean I'm receiving more than I ought to?

Erm.. Pardon?

[BigRed]

At present, I am on the FRS AND I keep all my expenditure receipts.

Does that mean I'm receiving more than I ought to?

You need your receipts to claim expenses, which reduces your CT. If you are on FRS you can only claim for VAT on receipts for over £2000 including VAT.

[smileyface]

£85.50 - £83.33 = £2.17, not £1.17

Under the standard scheme, you pay all the VAT to HMRC, less the VAT on purchases. So you need to keep individual VAT receipts and work it out. The flat rate scheme simplifies admin.

However, the FRS is changing from April - a new 'limited trader' rate of 16.5% will apply to nearly all of us - so on your £100 you will pay £16.50 to HMRC, leaving £83.50 - a 'profit' of just 17p which is unlikely to cover your actual VAT expenditure

At present, I am on the FRS AND I keep all my expenditure receipts.

Does that mean I'm receiving more than I ought to?

[Mark2009]

I am in the process of cancelling my VAT after 4 years due to the Government changing the laws on the flat rate scheme from 14.5% to 16.5%.
From what I am reading the government are going to be left with another black hole.

Thanks
Mark

[teapot418]

Can someone please explain what is meant by Standard Rate Tax, re VAT?

Assume you earn £83.33 a day. VAT is charged at 20%, so in total, I would charge my clients 1.2 * £83.33 = £100.

Under the Flat Rate Scheme, I pay 14.5% of £100 (ie £14.50) to HMRC, leaving me with £85.50, so a small profit of £85.50 - £83.33 = £1.17.

How would it work under the Standard Rate Scheme?

Thanks

£85.50 - £83.33 = £2.17, not £1.17

Under the standard scheme, you pay all the VAT to HMRC, less the VAT on purchases. So you need to keep individual VAT receipts and work it out. The flat rate scheme simplifies admin.

However, the FRS is changing from April - a new 'limited trader' rate of 16.5% will apply to nearly all of us - so on your £100 you will pay £16.50 to HMRC, leaving £83.50 - a 'profit' of just 17p which is unlikely to cover your actual VAT expenditure

[smileyface]

Can someone please explain what is meant by Standard Rate Tax, re VAT?

Assume you earn £83.33 a day. VAT is charged at 20%, so in total, I would charge my clients 1.2 * £83.33 = £100.

Under the Flat Rate Scheme, I pay 14.5% of £100 (ie £14.50) to HMRC, leaving me with £85.50, so a small profit of £85.50 - £83.33 = £1.17.

How would it work under the Standard Rate Scheme?

Thanks