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Flat Rate VAT Scheme Calculator 2026/27

Updated for the 2026/27tax year · Last updated

country: "UK" applicableCountries: ["UK"]

The Flat Rate Scheme (FRS) lets VAT-registered businesses pay a fixed percentage of gross turnover to HMRC instead of tracking every input and output VAT transaction. Rates range from 9.5% to 16.5% depending on your sector. You still charge customers 20% VAT — the difference between what you collect and what you pay is yours to keep.

This calculator shows exactly how much VAT you'd owe on the Flat Rate Scheme, compares it with standard VAT accounting, and tells you whether the FRS is worth it for your business.

Your total sales including 20% VAT charged to customers

VAT you'd reclaim on purchases under standard accounting — leave blank to compare at zero

Enter your annual turnover above.

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How this calculator works

Gross turnover (VAT-inclusive)

Enter your total annual turnover including 20% VAT. If your net turnover is £80,000, your gross turnover is £96,000 (£80,000 × 1.2). HMRC applies your FRS percentage to this gross figure.

Flat Rate VAT owed

Your FRS payment = gross turnover × your sector's FRS rate (with a 1% reduction in your first year of VAT registration). The rate stays fixed regardless of how much you actually spend on VAT-taxable purchases.

Standard VAT comparison

Under standard VAT accounting, you pay HMRC the difference between output VAT collected (gross × 20/120) and input VAT reclaimed on business purchases. Enter your estimated annual input VAT to see how the two approaches compare.

Limited cost business warning

If your sector rate is 16.5%, you're classified as a limited cost business. The effective standard rate is 20/120 = 16.67%, so the FRS produces almost no saving — and may actually cost more once the compliance cost of running two sets of figures is removed. Service businesses spending very little on goods typically hit this rate; if you're unsure, test against the 16.5% "limited cost" row.

First-year discount

In your first year of VAT registration, HMRC applies a 1% discount to your FRS rate. Toggle this on if you registered for VAT within the last 12 months.

Frequently asked questions

The Flat Rate Scheme (FRS) is an HMRC simplification for small VAT-registered businesses. Instead of tracking every penny of input and output VAT, you pay a fixed percentage of your gross (VAT-inclusive) turnover to HMRC. The percentage depends on your business sector — rates range from 9.5% to 16.5%. You still charge your customers the standard 20% VAT, but you keep the difference between what you charge and what you pay over. The scheme reduces admin but isn't always financially beneficial.
You can join the FRS if your VAT-taxable turnover is £150,000 or less (excluding VAT) when you apply. You must leave the scheme once your total gross turnover (including VAT) exceeds £230,000. You cannot use the FRS if you have left it in the past 12 months, if you're closely associated with another FRS business, or if you've committed a VAT offence in the past year.
The FRS is most beneficial for businesses with low input VAT — service businesses, freelancers, consultants, and contractors who spend little on VAT-qualifying goods and supplies. If you spend very little on VAT-taxable purchases (equipment, materials, etc.), the standard scheme requires you to pay over nearly all of the 20% VAT you collect, while the FRS lets you keep a portion. Run the numbers here to see your specific saving.
A "limited cost business" is one whose VAT-inclusive expenditure on goods is either less than 2% of VAT-inclusive turnover, or less than £1,000 per year. Most service businesses — IT consultants, accountants, freelancers — fall into this category. The FRS rate for limited cost businesses is 16.5%, which is very close to the effective standard rate (20/120 = 16.67%), meaning the FRS produces little or no saving. If your sector rate is 16.5% or above, you should carefully model whether the FRS still makes sense.
Generally no — one of the trade-offs of the FRS is that you cannot reclaim input VAT on your normal business purchases. The one exception is capital goods costing more than £2,000 (VAT-inclusive), where you can reclaim the input VAT separately. If you're planning a large equipment purchase, factor this in when deciding whether to stay on the FRS.
You can leave voluntarily at any time by writing to HMRC. You must leave if your turnover exceeds the exit threshold (£230,000 gross). Once you leave, you return to standard VAT accounting and can reclaim input VAT in the normal way. HMRC must be notified and will give you an exit date from your next VAT period.
In your first year of VAT registration (not just your first year on the FRS), HMRC gives a 1% discount on your FRS rate. If your sector rate is 14.5%, you pay 13.5% in year one. This can add up to a meaningful saving — at £100,000 gross turnover the discount is worth £1,000. The discount applies to your entire first year of VAT registration, not just your first year on the scheme.

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