Pillar · Flat Rate Scheme
The Flat Rate Scheme, sector by sector
Policy state · verified
Flat Rate Scheme percentages
VAT Notice 733 §4.4 (trade-sector table) · Last verified 13 Jun 2026
gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733How the scheme works
Under the Flat Rate Scheme you charge your customers the normal 20% VAT, but you pay HMRC a fixed percentage of your gross (VAT-inclusive) turnover instead of accounting for VAT on every sale and purchase. The percentage depends on your trade sector. In exchange for the simplicity, you usually cannot reclaim VAT on purchases (except certain capital assets over £2,000). VAT Notice 733
Who can join
- You can join if your VAT-taxable turnover (excluding VAT) will be £150,000 or less in the next 12 months.
- You must leave if your total business income (including VAT) is more than £230,000 on the anniversary of joining, or you expect it to exceed that in the next 30 days.
Two rules that change the maths
First-year discount. You get a 1% reduction on your flat rate for the first 12 months you are VAT-registered.
Limited-cost business.If your goods cost less than 2% of your turnover (or less than £1,000 a year), you are a “limited-cost business” and must use the 16.5% rate regardless of your sector. This catches many labour-only service businesses, so check it carefully.
Flat Rate Scheme advisor · 58 HMRC trade sectors
Your FRS percentage and the FRS-vs-Standard maths
IT & professional services · 11
Trades & construction · 10
Creative & media · 6
Beauty & personal care · 2
Retail & food · 7
Hospitality & leisure · 6
Transport & agriculture · 5
Other services · 11
IT & professional services
IT consultant
Covers computer and IT consultancy and data processing — distinct from computer repair, which sits in a lower-rated sector.
HMRC label: Computer and IT consultancy or data processing
- FRS VAT due (14.5% × gross £72,000)
- £10,440
- Standard VAT due (20% output − 4% input)
- £9,600
- Estimated annual extra cost on FRS
- −£840
Input VAT is an estimate you control above — your actual recoverable input VAT depends on your specific VAT-bearing costs. The Flat Rate Scheme does not let you reclaim input VAT (except on certain capital assets over £2,000).
| Net turnover | FRS due | Standard due |
|---|---|---|
| £30,000 | £5,220 | £4,800 |
| £50,000 | £8,700 | £8,000 |
| £80,000 | £13,920 | £12,800 |
| £120,000 | £20,880 | £19,200 |
| £150,000 | £26,100 | £24,000 |
Policy state · verified
Flat Rate Scheme percentages: IT consultant · 14.5%
VAT Notice 733 §4.4 (trade-sector table) · Last verified 13 Jun 2026
gov.uk/guidance/flat-rate-scheme-for-small-businesses-vat-notice-733All 58 HMRC trade sectors
These are the published sector percentages from the VAT Notice 733 trade table. Open any one for its own page with the FRS-vs-Standard maths at sample turnovers.