VAT Flat Rate Scheme: Could It Work for You?

Price Mann • February 11, 2026

VAT Flat Rate Scheme: Could It Work for You?

If you are a small VAT-registered business, how you calculate your VAT could make a real difference to your cash flow and the time you spend keeping records.

For some businesses, the standard method for calculating VAT is the best choice, but for others, their circumstances mean the VAT Flat Rate Scheme may be worth considering. Here we review some of the factors involved in determining whether the VAT Flat Rate Scheme could work for you.

Comparing methods

Under the standard method you charge VAT on your sales and reclaim VAT on your purchases. You then pay the difference to HM Revenue & Customs (HMRC).

The Flat Rate Scheme uses a different calculation. You still charge your customers the usual VAT rate. However, instead of reclaiming VAT on most purchases, you pay a fixed percentage of your VAT-inclusive turnover to HMRC. The percentage amount depends on the industry your business belongs to.

Eligibility rules apply. Businesses may be able to join the VAT Flat Rate Scheme if their VAT turnover is £150,000 or less (excluding VAT).

When the Flat Rate Scheme might help

The Scheme can work well for businesses when VAT-able expenses are low. For example, a consultant or designer who mainly sells their time may find the flat rate percentage more favourable than reclaiming VAT under the standard method.

Some business owners also prefer the simplicity. Because you don’t claim VAT on purchases, other than certain capital assets over £2,000, the calculations can be quicker.

When the standard method may be better

If your business regularly buys goods or services with VAT on them, reclaiming VAT through the standard method is often more cost-effective. The same can be true if you regularly make larger purchases.

Choosing a method

The best way to be sure which method is right for you is to run the numbers and compare.

If you would like advice on whether the Flat Rate Scheme is right for you, give us a call. We are happy to help!

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P60 deadline: Actions to take before 31 May

By Price Mann • May 6, 2026

Many business owners treat P60s as a simple box-ticking exercise. While meeting the deadline is important, stopping there means missing a valuable opportunity to identify payroll errors early, before they become more costly to resolve later in the year. With the 31 May deadline approaching, here is what you need to know and why it matters. P60 deadline: 31 May 2026 Every employee on your payroll as at 5 April 2026 must receive their P60 by 31 May 2026. There are no extensions. Missing the deadline may result in HMRC penalties, as well as issues for employees who require their P60 for mortgage applications, tax returns, or benefit claims. If you manage payroll in-house, ensure this is scheduled. If you outsource payroll, confirm with your provider that it is being handled. Key change for 2026/27: Plan 5 student loans From the 2026/27 tax year, Plan 5 student loans will enter repayment. The threshold is £25,000, which is lower than Plan 2, meaning more employees may be affected than expected. Now is the time to check which plan each employee is on. Errors in this area can lead to payroll corrections, HMRC queries, and additional administrative work. Accountant’s tip: Use the P60 process to review student loan plans and ensure the correct deductions are in place for the new tax year. Use P60s as a payroll review While reviewing P60s, carry out a sense check on Benefits in Kind ahead of the July P11D deadline. Common issues include company cars, private medical insurance, and interest-free loans being incorrectly classified or overlooked. Identifying any issues now allows time to correct them properly, rather than dealing with pressure and potential penalties closer to the deadline. What to review before 31 May Confirm all eligible employees will receive their P60 on time Review student loan plans, particularly where employees may fall under Plan 5 Cross-check Benefits in Kind against payroll records Ensure 2026/27 tax codes are correct from the start of the tax year Need support? Please contact us