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If you have relatively simple affairs and are registered for VAT, you could apply to join the flat rate scheme. For example, you supply monthly IT services to a VAT registered business.

How does it work

You don't claim input VAT, rather, you pick a flat rate scheme/percentage (from the HMRC website) most relevant to your business and apply that rate to you VAT inclusive sales number

Can you give me an example?

• You charge a client £10k + 20% VAT = £12,000
  
• They pay you £12,000
  
• You then calculate the VAT liability using your flat rate %, for example, 11%
  
• £12,000 @ 11% = £1,320
  
• You pay HMRC £1,320
  
• Your profit from the job is therefore £10,680
  

When can I join?

• you're a VAT-registered business
  
• you expect your VAT taxable turnover to be £150,000 or less (excluding VAT) in the next 12 months
  

Are there any other things i need to be aware of?

• If you purchase equipment above £2k, you can reclaim the VAT
  
• You get a 1% discount in the first year you register for the scheme
  
• This scheme can be combined with the annual VAT scheme
  
• If your a "limited cost business", you pay a higher VAT rate of £16.5%. You're classed as a 'limited cost business' if your goods cost less than either:
  
  • 2% of your turnover
    
  • £1,000 a year (if your costs are more than 2%)