FLAT VAT first year deduction

[beoptima]

Friends
I have started contracting recent read in the link below that there is 1% reduction in flat vat rate in the first year

does this mean that if my flat vat rate for IT is 11.5%, I only have to pay 10.5% in the first year?

Thanks

[northernladuk]

No it will actually be 10.25% for 9 months

[beoptima]

Thanks

Hi
thanks for your response but can you please be more clear on this why is it 10.25% for 9 months?
Please let me know if I can refer to this on hmrc site

thanks

[Moscow Mule]

Let me search that for you.

http://search.hmrc.gov.uk/kbroker/in...at+rate+scheme

[thunderlizard]

does this mean that if my flat vat rate for IT is 11.5%, I only have to pay 10.5% in the first year?

Yes that's right. You have stumbled on a rare bit of UK tax law that is very new and hence still straightforward. (well, it eventually gets complicated when you inevitably hit the end of the discount year in the middle of a VAT quarter and have to pro-rata the 1%, but cross that bridge when you get to it).

[northernladuk]

Hi
thanks for your response but can you please be more clear on this why is it 10.25% for 9 months?
Please let me know if I can refer to this on hmrc site

thanks

/Faceroll