Changes to the VAT flat rate scheme for limited cost traders
From 1 April 2017 a new VAT flat rate of 16.5% is to be introduced for limited cost traders. It will replace all the existing rates in any case where the value of VAT-inclusive spend on purchase of goods by a business is either less than 2% of your VAT-inclusive turnover (or, if more than 2% of turnover, less than £250 per quarter (£1,000 a year)). For this purpose “goods” means goods which are used exclusively for the business.
This means that for many businesses currently using a flat rate scheme the new rate must be applied from 1 April 2017 regardless of the company’s trade.
You can read more on this by reading or downloading our article on the subject by following this link.
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