Autumn statement - end of VAT flat rate scheme?

[dingdong]

Just watched the Autumn Statement and Hammond suggested there would be changes coming (ie. closure) of the flat rate VAT scheme to increase tax revenues.

Which basically means less profit and a lot more admin for most contractors.

[Yorkie62]

Not abolished but rising to 16.5%

Also further restrictions to come on what was termed disguised renumeration

Public sector changes to go ahead.

[Yorkie62]

16.5% of gross is approx 20% of net. So yes effectively flat rate vat has been abolished.

[eek]

16.5% of gross is approx 20% of net. So yes effectively flat rate vat has been abolished.

Not quite, making a 2% profit from the flat rate scheme has been abolished.

[Yorkie62]

Difference on 20% of £833.33 and 16.5% of £999.99 is £1.66.

833.33×1.2 = 999.99

[Lance]

Difference on 20% of £833.33 and 16.5% of £999.99 is £1.66.

833.33×1.2 = 999.99

well I never. Been doing FRS for years now and never realised how little I was making.
I hadn't twigged it's paid on gross revenue.
So in effect there's 0.2% profit to be made from April. Which is more than offset by a single iPhone.
I'll be quitting FRS it seems.

[Waldorf]

Yes, effectively the flat rate scheme has been abolished, in the sense that it would make no sense to continue to use it. You'd save more going on the normal VAT regime, you can then reclaim VAT on expenses.

[vwdan]

I've been on standard VAT since I started and, to be honest, I never really felt the need to move. It's great getting hotels at the VAT free price etc.

[Waldorf]

Of greater worry is the proposed review of different ways of remuneration. The OBR has highlighted "the growing cost to the Exchequer of incorporation", this probably means us. We will have to wait for the consultation document to see what they are up to.

[Waldorf]

There are a couple of moves to align income tax and NIC so I expect the move is towards a full merger, another thing for us to keep our eye on with the impact on the taxation of dividends.