Enter the amount you invoice clients before adding VAT.
Check HMRC guidance for your specific sector rate (e.g., IT is 14.5%, Limited Cost Trader is 16.5%).
Calculation Results
Net Turnover:£0.00
+ VAT Charged to Client (20%):£0.00
= Gross Turnover (Total Invoice):£0.00
Effective Flat Rate:0%
VAT Payable to HMRC:£0.00
Flat Rate Surplus (Profit):£0.00
function calculateVAT() {
// 1. Get Inputs
var netInput = document.getElementById("netTurnover").value;
var rateInput = document.getElementById("flatRate").value;
var isFirstYear = document.getElementById("firstYear").checked;
// 2. Parse numbers
var netTurnover = parseFloat(netInput);
var flatRate = parseFloat(rateInput);
// 3. Validation
if (isNaN(netTurnover) || netTurnover < 0) {
alert("Please enter a valid Net Turnover amount.");
return;
}
if (isNaN(flatRate) || flatRate < 0) {
alert("Please enter a valid Flat Rate percentage.");
return;
}
// 4. Logic Calculation
// Standard VAT charged to client is usually 20% in the UK
var standardVatRate = 0.20;
var vatCharged = netTurnover * standardVatRate;
var grossTurnover = netTurnover + vatCharged;
// Determine effective flat rate
var effectiveRate = flatRate;
if (isFirstYear) {
effectiveRate = flatRate – 1.0;
if (effectiveRate < 0) effectiveRate = 0;
}
// Flat rate is calculated on the GROSS amount (Net + VAT)
var vatPayable = grossTurnover * (effectiveRate / 100);
// Surplus is the difference between what you collected and what you pay
var surplus = vatCharged – vatPayable;
// 5. Display Results
document.getElementById("resultBox").style.display = "block";
// Formatting currency
var formatter = new Intl.NumberFormat('en-GB', {
style: 'currency',
currency: 'GBP',
minimumFractionDigits: 2
});
document.getElementById("resNet").innerText = formatter.format(netTurnover);
document.getElementById("resVatCharged").innerText = formatter.format(vatCharged);
document.getElementById("resGross").innerText = formatter.format(grossTurnover);
document.getElementById("resEffectiveRate").innerText = effectiveRate.toFixed(2) + "%";
document.getElementById("resPayable").innerText = formatter.format(vatPayable);
document.getElementById("resSurplus").innerText = formatter.format(surplus);
}
Understanding the VAT Flat Rate Scheme
The VAT Flat Rate Scheme (FRS) is a simplified method designed by HMRC to help small businesses and limited companies manage their Value Added Tax obligations. Unlike the standard scheme, where you must record and offset the VAT on every purchase you make, the Flat Rate Scheme allows you to pay a fixed percentage of your gross turnover.
How the Flat Rate Calculator Works
This calculator helps freelancers, contractors, and small business owners determine their VAT liability under the FRS. Here is the logic behind the numbers:
Net Turnover: This is the amount you invoice for your services before tax.
VAT Charged (20%): You still charge your clients the standard 20% VAT on your invoices. This money is collected by you.
Gross Turnover: This is the total money received (Net + VAT). Under FRS, your tax is calculated on this inclusive figure.
Flat Rate Percentage: Depending on your trade sector (e.g., IT consulting, construction, photography), HMRC assigns a specific percentage.
The Surplus: Often, the amount you pay HMRC at your lower flat rate is less than the 20% you collected. The difference stays in your business as profit.
First Year Discount
If you have recently registered for VAT, HMRC offers a 1% discount on your sector's flat rate for the first year of registration. Our calculator includes a checkbox to apply this reduction automatically.
The Limited Cost Trader Rule (16.5%)
It is important to note the "Limited Cost Trader" rule introduced to prevent aggressive tax avoidance. If your business spends less than 2% of its turnover (or less than £1,000 per year) on relevant goods, you may be classified as a Limited Cost Trader. In this case, you must use a flat rate of 16.5% regardless of your sector.
Using this calculator allows you to quickly estimate your quarterly or annual VAT bills and see exactly how much of the VAT collected you get to retain as profit.