Yes there are. HM Revenue & Customs have three simplified accounting schemes for small businesses, one of which is the “Flat Rate” scheme. If your business has a taxable turnover (excluding VAT) up to £150,000 you may be eligible. You are also able to join the scheme you expect your total business income (including VAT) to be below £187,500.
The flat rate scheme saves you time, by simplifying your VAT accounting into a single calculation. Under the scheme, you pay VAT as a percentage of your turnover instead of having to work out and record the VAT on all your sales and purchases. There is also a 1% reduction on the rate if you are in the first year of VAT registration.
The percentage is determined by the type of business (that is, the kind of goods or services being traded) and this varies between 2 and 13%. It makes your life easier as there is no input tax to account for (although a business can reclaim VAT on capital items costing over £2,000).
You must leave the scheme when your turnover (excluding sales of capital assets) exceeds £225,000. You can however voluntarily leave the scheme at any time but you must let the HMRC know in writing, and if you do decide to leave, you cannot rejoin it for 12 months.
There are certain businesses excluded from using the scheme so you should contact your local TaxAssist accountant to discuss registering for the Flat Rate scheme.
By Jo Nockels
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