Small Business Accountants

How do I register for flat rate VAT?

The VAT Flat Rate Scheme simplifies VAT accounting for small businesses by applying a fixed percentage to your gross turnover instead of tracking individual invoices. To join, your taxable turnover must be no more than 150,000 pounds excluding VAT. You can register when first signing up for VAT or later by submitting form VAT600 FRS to HMRC by email or post.

By Jordan Macey MAAT Reviewed by Noor Fiaz Updated 16 Apr 2026 1

How do I register for flat rate VAT? - GoForma Tax Guides | UK Accountants & Tax Advisors

Key takeaways

{'heading': 'Turnover threshold applies', 'description': 'Your taxable turnover must be 150,000 pounds or less excluding VAT to join the Flat Rate Scheme. You must leave if total turnover exceeds 230,000 pounds including VAT.'}
{'heading': 'First-year discount available', 'description': 'New VAT-registered businesses get a 1% discount off their flat rate percentage during the first year of registration, which reduces the amount of VAT you pay to HMRC.'}
{'heading': 'Limited cost trader rules', 'description': 'If your goods purchases are below 2% of turnover or under 1,000 pounds per year, you are classed as a limited cost trader and must use the higher 16.5% flat rate.'}
{'heading': 'Rates vary by business type', 'description': 'Each trade sector has a different flat rate percentage set by HMRC. For example, IT consultancy businesses pay 14.5%, while other sectors may pay more or less depending on their category.'}
{'heading': 'Two ways to register', 'description': 'You can join the scheme online at the same time as your initial VAT registration, or apply separately by completing and submitting form VAT600 FRS to HMRC by email or post.'}

You’ll first need to check that you’re eligible for the VAT Flat Rate Scheme.

If you’re eligible, you can join the scheme online when you register for VAT, or submit the VAT600 FRS through one of the methods below:

By email to frsapplications.vrs@hmrc.gsi.gov.uk
By post to:

BT VAT

HM Revenue and Customs

BX9 1WR

You’ll receive notification that you’ve joined the scheme through your VAT online account, or by post if you did not apply online.

Frequently asked questions

What is the VAT Flat Rate Scheme?

The VAT Flat Rate Scheme is a simplified method of accounting for VAT designed for small businesses. Instead of calculating the exact VAT on every purchase and sale, you pay a fixed percentage of your gross turnover to HMRC. You still charge VAT at the standard rate to customers, but the difference between what you charge and what you pay under the flat rate is yours to keep or pay, depending on the percentage.

What are the eligibility requirements for the Flat Rate Scheme?

To join the Flat Rate Scheme, your taxable turnover must be 150,000 pounds or less excluding VAT. You must not have left the scheme in the previous two years. Your business must be VAT-registered or applying for VAT registration at the same time. HMRC may also refuse applications from businesses involved in certain VAT avoidance arrangements or those with poor compliance records on previous VAT obligations.

How do I apply for the Flat Rate Scheme?

You can apply online through your Government Gateway account when you first register for VAT. If you are already VAT-registered, download and complete form VAT600 FRS from the GOV.UK website, then submit it to HMRC by email or post. HMRC will confirm your acceptance through your VAT online account. Processing usually takes a few weeks, and your start date will be confirmed in the notification letter or message you receive.

What is the first-year discount and how does it work?

If you are in your first year of VAT registration, HMRC gives you a 1% reduction on the flat rate percentage that applies to your business sector. For example, if your sector rate is 14.5%, you would pay only 13.5% during the first twelve months. This discount applies automatically from your VAT registration date and ends on the first anniversary of that date, after which the standard sector rate takes effect.

What is a limited cost trader?

A limited cost trader is a business whose spending on goods is less than 2% of its gross turnover, or under 1,000 pounds per year if that figure is higher. If you fall into this category, you must use the flat rate of 16.5% regardless of your business sector. This rule was introduced to prevent businesses with very low goods costs from gaining an unfair advantage. Services-based businesses are most commonly affected by this classification.

When must I leave the Flat Rate Scheme?

You must leave the Flat Rate Scheme if your total business income, including VAT, exceeds 230,000 pounds in any twelve-month period. You must also leave if you are no longer eligible for another reason, such as becoming part of a VAT group. HMRC can also remove you from the scheme if they believe you are using it to gain an unfair tax advantage. You must notify HMRC within 30 days of becoming ineligible.

Can I reclaim VAT on purchases under the Flat Rate Scheme?

Generally, you cannot reclaim VAT on individual purchases under the Flat Rate Scheme because the simplified percentage already accounts for input VAT. However, there is one exception: you can reclaim VAT on capital assets costing 2,000 pounds or more including VAT. This applies per single purchase, not cumulative spending. Apart from this exception, the flat rate percentage is designed to cover all your input VAT, which is why accurate sector selection matters.

How do I find the correct flat rate percentage for my business?

HMRC publishes a full list of flat rate percentages by business type on the GOV.UK website. You need to match your main business activity to the closest category listed. For instance, IT consultancy sits at 14.5%, while retail food is lower. If your business covers multiple activities, use the rate for the activity that generates the largest share of your turnover. Choosing the wrong category can result in overpaying or underpaying VAT.

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