Free Tool
VAT Flat Rate vs Standard VAT
Once you are registered you have a choice of scheme, and for drivers it often makes a difference of thousands a year. Put in your numbers and see which one wins.
Your figures
Annual, VAT-inclusive. Nothing is sent to us.
VAT registration is compulsory above £90,000 in any rolling 12 months.
Counts as 'goods' for the limited cost business test.
Servicing, tyres, valeting, phone. Not insurance or council licensing — those carry no reclaimable VAT.
Flat Rate Scheme is cheaper
£3,233
A year better off on the Flat Rate Scheme, on these numbers.
Flat Rate
£9,600
At 10.0% of gross fares
Standard
£12,833
£16,000 less £3,167 reclaimed
You are over the registration threshold
Above £90,000 of turnover in any rolling 12 months, registration is compulsory. Registering late means owing VAT you never collected from anyone, so this is worth dealing with promptly.
An illustration, not advice. It assumes all your fares carry VAT at 20% and that the costs you entered carry reclaimable VAT — insurance is exempt and council licensing is usually outside the scope, so neither should be included. Your own arrangement can change the answer substantially, so talk to us before choosing a scheme.
How It Works
Two schemes, two very different sums.
Under standard VAT you account for 20% on your fares, reclaim the VAT on what you buy, and pay HMRC the difference.
Under the Flat Rate Scheme you hand over a fixed 10% of your VAT-inclusive turnover and stop tracking VAT on purchases altogether.
Drivers often have less reclaimable VAT than they assume, which is why the flat rate usually comes out ahead — but not always, and not if you fall into the limited cost category.
Approaching £90,000 in fares?
Talk to us before you cross the threshold rather than after. The whole thing is straightforward with notice and expensive without it.