I am on the vat flat rate scheme at 7.5%, but there is no option to set vat at 7.5%, how am I able to do this?
Hello @benovinluxurywigsltd
I checked your account and I can see it is set up correctly (you have selected flat rate vat and entered 7.5% in your vat settings).
Yes, but when creating invoices there is no option for 7.5%
Hello @benovinluxurywigsltd
Invoices are entered at the normal rates.
The 7.5% flat rate is calculated at the point you run the vat return (see here in the article I sent you)
Your invoices charge your customers VAT at thr normal rates the same as any VAT registered business (usually 20% of the net, but maybe 5% or 0% depending what you’re selling and whether your customers are UK or overseas).
But on Flat Rate when you submit a VAT return HMRC only require you to pay them 7.5% of your inc VAT sales total instead of the usual approx 16.6% in return for not being allowed to reclaim the VAT you paid on your purchases. Whether this saves or costs you money compared to standard VAT accounting depends whether you purchase more or less than average for your business sector, relative to the amount you sell, and on the exact split of your sales between zero rated and standard rated.
(16.6% because if you’re charging your customers VAT at 20%-of-net then the VAT amount is one sixth - 16.67% - of the total sales including VAT)
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