VAT scheme comparison calculator
The Flat Rate Scheme is not always cheaper. A limited cost business pays 16.5%, which is often worse than standard VAT. This calculator compares all three schemes using your actual figures.
Enter your gross turnover and input VAT, and see Standard, Flat Rate and Cash Accounting side-by-side. The tool flags the limited-cost-business rule and the Flat Rate join and exit thresholds.
Your Trading Profile
What this changes
Total invoiced turnover including VAT. You can join Flat Rate only if expected VAT-taxable turnover is £150,000 or less excluding VAT. Existing users usually leave once VAT-inclusive turnover is more than £230,000. Cash Accounting entry is based on £1.35m excluding VAT.
What this changes
Goods (not services) purchased with VAT, used for the trade. If goods cost less than 2% of turnover, or less than £1,000 a year where they are more than 2%, the 16.5% limited-cost-business rate applies.
What this changes
VAT paid on services and overheads (subscriptions, professional fees, vehicle costs, utilities). Reclaimable on the Standard scheme but NOT on Flat Rate (except capital purchases over £2,000). High service input VAT shifts the answer toward Standard.
What this changes
Sector-specific percentage applied to VAT-inclusive turnover. Use the HMRC-published rate for your main trade. If the limited-cost-business test applies, the 16.5% rate overrides the sector rate.
What this changes
A 1 percentage-point reduction on the Flat Rate for the first 12 months from VAT registration. So a 14.5% rate becomes 13.5% in year one. Only matters for the Flat Rate calculation, has no effect on Standard or Cash Accounting.
Best scheme for you
Rates current for tax year 2026/27
These calculators are diagnostic tools intended to give you an initial estimate. They are not a substitute for personalised advice on your specific circumstances. Figures depend on the inputs you provide and on tax rules that change over time. Speak to us before acting on any result.
A CIMA Chartered Management Accountant will review your details and send you a tailored breakdown.
Limited cost business rule: if VATable goods purchases are less than 2% of turnover, or less than £1,000 a year where they are more than 2%, you must use 16.5%. Flat Rate can be joined at £150k or less excluding VAT; existing users usually leave above £230k including VAT. Cash Accounting entry is based on £1.35m excluding VAT.