This calculator compares the Flat Rate VAT Scheme (FRS) with the standard VAT method to show which results in a lower VAT payment.
Choosing the right VAT scheme can significantly impact your business profitability, especially for small businesses and sole traders in the UK.
The Flat Rate Scheme simplifies VAT by applying a fixed percentage to your turnover, while the standard method calculates VAT based on output minus input VAT.
This tool helps you quickly compare both methods so you can make an informed decision.
The calculator shows how much VAT you would pay under each scheme and the difference between them.
If the flat rate result is lower, the Flat Rate Scheme may be beneficial. If higher, the standard method may be better.
This makes it a powerful tool for VAT planning and financial optimisation.
Standard VAT is calculated as output VAT minus input VAT.
Flat Rate VAT is calculated as a fixed percentage of your total VAT-inclusive turnover.
The difference between the two shows potential savings or extra cost.
Businesses with high expenses often benefit more from the standard VAT scheme.
Example 1:
£12,000 turnover → Standard £1,600 vs FRS £1,440 → FRS saves £160
Example 2:
£5,000 turnover → Standard £733 vs FRS £450 → FRS saves £283
Example 3 (High costs):
High purchase costs may make standard VAT more favourable.
A simplified VAT scheme using a fixed percentage.
No, it depends on your costs and business type.
Compare both methods before deciding.