VAT @ 15% but how will this affect flat rate scheme VAT?

sillysausage237

Now that VAT is going to be reduced to 15% will the flat rate scheme be amended accordingly? For example, at the moment my husband pays 13% VAT as a contractor but as VAT is falling to 15% this will halve the amount he gets from the difference?

Mathsguy

I'm sure the FRS will be ammended as appropriate.

BTW, you pay 13% of the Gross amount... so if it stayed at 13% and VAT was dropped to 15% then you would make a loss.. so I'm certain it will also change.

hippey

Yes the flat rate schemes have been altered to reflect the new rates.

Check the HMRC site, they are there already, but a bit slow tonight.

JasonLVC

New flat rate tables - Appendix E

http://www.hmrc.gov.uk/pbr2008/vat-guide-det.pdf

Renfro

I asked this question yesterday here:
http://forums.moneysavingexpert.com/showthread.html?p=16126721&#post16126721

JasonLVC's post (above) links to the document that has the answer.

My response on the change is here:
http://forums.moneysavingexpert.com/showthread.html?p=16154153

shabbychicfan

Our flat rate reduced from 9.5 to 8.5% so technically we are worse off..:rolleyes:

stphnstevey

You basically split the loss in VAT with the goverment - however for me it wasn't 50:50. I lost 1.5% and they lost 1%.

If your paying by DD, think yor final DD will be changed accordingly

Also, if you calculate you are going to be paying a lot less VAT, you can ask them to change it

longforgotten

Shabbychicfan, why are you worse off ? 8.5% is less than 9.5% so sorry I don't understand.

Should I have read one of the JasonLVC links ?

chucky

longforgotten wrote: »

Shabbychicfan, why are you worse off ? 8.5% is less than 9.5% so sorry I don't understand.

Should I have read one of the JasonLVC links ?

firms would receive 17.5% - 9% that was paid = 8.5% saved
now it's 15% - 8% that is paid = 7.5% saved

obviously the downside of this is that you don't reclaim VAT on purchased items which is the reason for the difference that is 'kept' due to admin etc...

longforgotten

I would be very interested to see what real difference the change makes. To actually compare the same return at 17.5% and 15%. Anybody had a go ? Rather a boring exercise for the New Year.

I think its far more important to actually make sure that the flat rate scheme is right for you, rather than the 'usual' invoices or cash accounting basis.

stphnstevey

We've just said, it's 1.5% less

Flat Rate is still ALOT better for me, I have little Input VAT and are about £5K better off a year.