Check HMRC guidance for your specific sector (e.g., IT is 14.5%).
Net Turnover (Excl. VAT):£0.00
VAT Charged to Client (20%):£0.00
Gross Turnover (Inc. VAT):£0.00
Applicable Flat Rate:0%
VAT Payable to HMRC:£0.00
Retained Profit from VAT:£0.00
* Calculation assumes standard VAT rate of 20% charged to client. Profit is the difference between VAT collected and VAT paid.
function calculateFlatRate() {
// 1. Get input values
var netInput = document.getElementById("frsNetTurnover");
var rateInput = document.getElementById("frsFlatRate");
var firstYearCheckbox = document.getElementById("frsFirstYear");
var netAmount = parseFloat(netInput.value);
var baseRate = parseFloat(rateInput.value);
var isFirstYear = firstYearCheckbox.checked;
// 2. Validation
if (isNaN(netAmount) || netAmount < 0) {
alert("Please enter a valid Net Turnover amount.");
return;
}
if (isNaN(baseRate) || baseRate < 0) {
alert("Please enter a valid Flat Rate percentage.");
return;
}
// 3. Perform Calculations
// Standard VAT Rate in UK is 20%
var standardVatRate = 0.20;
// Calculate VAT charged to customer (Standard Rate)
var vatCharged = netAmount * standardVatRate;
// Calculate Gross Turnover (The amount the flat rate is applied to)
var grossAmount = netAmount + vatCharged;
// Determine effective Flat Rate
var effectiveRate = baseRate;
if (isFirstYear) {
effectiveRate = baseRate – 1.0;
// Ensure rate doesn't go below 0
if (effectiveRate < 0) effectiveRate = 0;
}
// Calculate amount payable to HMRC
// Formula: Gross Turnover * (Flat Rate / 100)
var payableToHMRC = grossAmount * (effectiveRate / 100);
// Calculate Retained Profit (VAT Collected – VAT Paid)
var retainedProfit = vatCharged – payableToHMRC;
// 4. Update the DOM
document.getElementById("resNet").innerHTML = formatCurrency(netAmount);
document.getElementById("resVatCharged").innerHTML = formatCurrency(vatCharged);
document.getElementById("resGross").innerHTML = formatCurrency(grossAmount);
document.getElementById("resEffectiveRate").innerHTML = effectiveRate.toFixed(1) + "%";
document.getElementById("resPayable").innerHTML = formatCurrency(payableToHMRC);
document.getElementById("resProfit").innerHTML = formatCurrency(retainedProfit);
// Show results
document.getElementById("frsResults").style.display = "block";
}
function formatCurrency(num) {
return "£" + num.toLocaleString('en-GB', {minimumFractionDigits: 2, maximumFractionDigits: 2});
}
Understanding the VAT Flat Rate Scheme
The VAT Flat Rate Scheme (FRS) is a simplified accounting scheme for small businesses in the United Kingdom. It is designed to reduce the administrative burden of recording VAT on every single purchase and sale. Instead of reclaiming VAT on purchases and paying the difference between input and output VAT, you pay a fixed percentage of your gross turnover to HMRC.
How the Calculation Works
Many business owners find the calculation confusing because the Flat Rate is applied to the gross amount (including the VAT you charged the client), not the net amount. Here is the step-by-step logic used in our calculator:
Invoice the Client: You charge your client the Net Amount plus the standard VAT rate (currently 20%).
Calculate Gross Turnover: Add the Net Amount and the VAT charged to get the Gross Turnover.
Apply Flat Rate: Multiply the Gross Turnover by your sector-specific Flat Rate percentage.
Pay HMRC: The result is the amount you owe HMRC. The difference between what you collected (20%) and what you paid (your flat rate) is yours to keep as profit.
Example Calculation
Let's say you are an IT Consultant. The typical flat rate for this sector is 14.5%.
Item
Amount
Net Invoice Value
£10,000
+ Standard VAT Charged (20%)
£2,000
= Gross Turnover
£12,000
Flat Rate Payable (14.5% of £12,000)
£1,740
Your VAT Profit
£260
In this example, you collected £2,000 in VAT but only had to pay HMRC £1,740, resulting in a £260 profit.
The 1% First Year Discount
If you are in your first year of VAT registration, HMRC offers a 1% discount on your flat rate percentage. This lasts until the day before your first anniversary of becoming VAT registered. Our calculator includes a checkbox to apply this discount automatically.
Important: The Limited Cost Trader Rule
Since April 2017, "Limited Cost Traders" must use a higher flat rate of 16.5%, regardless of their sector. You are likely a limited cost trader if your expenditure on relevant goods (not services) is less than 2% of your turnover or less than £1,000 per year. If this applies to you, enter 16.5 in the "Sector Flat Rate" field above.
Who Can Join?
You can join the scheme if your estimated VAT taxable turnover (excluding VAT) in the next year will be £150,000 or less. Generally, you must leave the scheme if your total income is more than £230,000.