VAT Schemes for Small Businesses
The UK offers special VAT schemes to help small businesses simplify VAT reporting and improve cash flow.
- Flat Rate Scheme
You charge VAT at the normal rate, but pay a fixed % of your gross turnover to HMRC.
- Easier bookkeeping
- Beneficial for service-based businesses with low costs
- Cash Accounting Scheme
You only pay VAT when customers actually pay you, not when you invoice them.
- Helpful for cash flow
- Ideal for businesses with late-paying customers
- Annual Accounting Scheme
You make advance VAT payments throughout the year and file one return annually.
- Less paperwork
- Easier budgeting
Standard VAT Accounting Scheme
The most common scheme where businesses charge VAT on sales and reclaim VAT on purchases, submitting VAT returns usually quarterly.
- No eligibility restrictions
- Businesses can reclaim VAT on all eligible goods and services
