When we compare this to the standard scheme, we posts the difference (gain or loss) to the ledger account for Other Income (4900). When you create your VAT Return, we automatically exclude the relevant purchases and calculate VAT based on the flat rate percentage you entered.Ī message appears on your return advising showing what VAT would have been due if you weren’t on the VAT Flat Rate Scheme and what the difference is. For more information, please refer to the following section. The only exception to this is the purchase or sale of a capital asset worth £2000 or more. Enter your sales and purchases as normal and choose the appropriate VAT rate. If you’re on the VAT Flat Rate Scheme you don’t need to do anything differently when processing your day-to-day accounts. Set up the VAT scheme and flat rate percentage If you’re not sure whether you qualify, check with HMRC. This figure includes your taxable income and also the value of any exempt and non-taxable income. You can stay in the scheme providing your total business income is no more than £230,000. It excludes the VAT and the value of any capital assets you expect to sell. VAT taxable turnover is everything you sell at the standard, zero and reduced VAT rates. You can join the scheme if you expect your VAT taxable turnover in the next 12 months to be £150,000 or less. If you choose cash-based, it calculates at the point of payment. If you choose invoice-based, the VAT calculates at the point of invoicing. You can choose to use either the invoice or cash-based VAT Flat Rate Scheme. The amount you actually pay or claim from HMRC is the difference between the VAT on your sales and your purchases. If you use the Standard VAT or VAT Cash Accounting schemes, you pay HMRC the VAT you charge on your sales and you reclaim the VAT you’re charged on your purchases. How is this different to Standard or VAT Cash Accounting schemes? The amount of VAT you pay to HMRC is calculated as a percentage of your gross turnover, this includes all sales including those which are Zero Rated and Exempt transactions. The flat rate percentage is applied when you calculate your VAT Return. On the Flat Rate Vat scheme, your day-to-day processing remains unchanged and VAT calculates at the standard, lower, exempt, zero rated and No VAT rates as normal. The VAT Flat Rate Scheme is an alternative way for small businesses to calculate VAT due to HMRC. How to set up ad use the Flat Rate VAT scheme in Sage Accounting About Flat Rate VAT
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