VAT Return Calculator UK

Calculate your VAT return under Standard, Flat Rate, or Cash Accounting schemes. Compare schemes side-by-side and monitor your VAT threshold.

VAT returns trip up more UK business owners than almost any other tax obligation. The current registration threshold is £90,000, but once you cross it, choosing the right VAT scheme can save you thousands each year. HMRC collected £161 billion in VAT in 2024/25, making it the UK’s second-largest source of tax revenue.

The standard scheme works for most businesses, but if you are a service-based company with low material costs, the flat rate scheme could reduce both your VAT bill and your admin burden. There is a catch that catches out consultants in particular: the limited cost trader rule means a business spending less than 2% of its VAT-inclusive turnover on physical goods (or less than £1,000 a year) must use 16.5% rather than its sector rate, which usually removes the saving entirely. Cash accounting, meanwhile, helps businesses that deal with slow-paying customers by aligning your VAT liability with actual cash received.

This calculator lets you compare all three schemes side by side using your real quarterly figures, applies the limited cost trader rule automatically, and monitors whether your annualised turnover is approaching the £90,000 threshold, so you can plan for registration before HMRC contacts you.

How it works

  1. Select your current VAT scheme and enter your quarterly sales and purchases (ex-VAT).
  2. The calculator fills VAT at 20% only when a VAT field is left blank — enter your own figures for mixed-rate supplies, or enter 0 if your supplies are zero-rated.
  3. View your VAT due, a scheme comparison table, and a threshold warning if your turnover reaches £81,000, giving you warning before the £90,000 registration threshold.

Written by the CalcStack team

Figures for the 2026/27 UK tax yearlast verified Sources: GOV.UK VAT rates, GOV.UK VAT returns

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Used for the limited cost trader test. Relevant goods are physical goods used in the business — they exclude services, rent, accountancy fees, software downloads, travel, food and drink, and capital items. Below 2% of VAT-inclusive turnover, or below £250 a quarter, the flat rate is 16.5%.

£
£
£

Calculated at 20% only if left blank. Enter 0 for zero-rated supplies.

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Calculated at 20% only if left blank. Enter 0 for zero-rated supplies.

Frequently asked questions

What is the VAT threshold in the UK?▾
The VAT registration threshold is £90,000, raised from £85,000 on 1 April 2024. If your taxable turnover exceeds this in any rolling 12-month period, you must register for VAT. The deregistration threshold is £88,000. You can also voluntarily register below the threshold, which can be beneficial if you sell mainly to VAT-registered businesses.
How does the standard VAT scheme work?▾
Under the standard scheme, you charge VAT on your sales (output VAT) and reclaim VAT on your purchases (input VAT). Each quarter, you pay HMRC the difference. If your input VAT exceeds output VAT, HMRC refunds the difference to you.
What is the flat rate VAT scheme?▾
The flat rate scheme simplifies VAT by applying a single percentage to your gross turnover (including VAT). The rate depends on your business type. You cannot reclaim input VAT on most purchases (except a single capital purchase over £2,000 including VAT). It suits businesses with low costs relative to income — but see the limited cost trader rule below, which pushes many low-cost service businesses onto 16.5%.
What is the limited cost trader rule?▾
Since 1 April 2017, a flat rate business is a "limited cost trader" for a VAT period if its spend on relevant goods, including VAT, is either less than 2% of its VAT-inclusive turnover, or more than that but less than £1,000 a year (£250 a quarter). A limited cost trader must use 16.5% rather than its sector percentage. Relevant goods are physical goods used in the business — they exclude services, rent, accountancy, software downloads, travel, food and drink, and capital items. Most consultants, IT contractors and other low-cost service businesses fall into this category, and at 16.5% the flat rate scheme is usually more expensive than the standard scheme.
When is the flat rate scheme better than standard?▾
The flat rate scheme is generally better when your input VAT is low relative to your sales and your sector percentage is well below the effective standard-scheme rate. If your purchases are high (for example retail or manufacturing), the standard scheme usually saves more because you can reclaim all input VAT. If you are a limited cost trader paying 16.5%, the flat rate scheme is rarely worthwhile — this calculator applies that rate automatically when the test is met.
What is cash accounting for VAT?▾
Cash accounting means you account for VAT based on when you receive payment (not when you invoice). This helps cashflow because you do not pay VAT on invoices until customers pay you. You can join the cash accounting scheme if your estimated taxable turnover for the next 12 months is no more than £1,350,000.
When are VAT returns due?▾
VAT returns are normally due quarterly, one month and 7 days after the end of the quarter. For example, a quarter ending 31 March has a return deadline of 7 May. Most businesses must file using Making Tax Digital (MTD) compatible software.
What is the reverse charge for construction?▾
The domestic reverse charge for construction services means the customer (not the supplier) accounts for VAT. This applies to VAT-registered builders providing standard or reduced-rated construction services to other VAT-registered businesses in the construction supply chain.
Can I claim back VAT on capital purchases?▾
Yes, under the standard scheme you can reclaim VAT on capital purchases used for your business. On the flat rate scheme, you can reclaim VAT on a single capital purchase of £2,000 or more (including VAT). You must have a valid VAT invoice to make a claim.
What happens if I exceed the VAT threshold?▾
If your taxable turnover exceeds £90,000 in any rolling 12-month period, you must register within 30 days of the end of the month in which you went over. If you expect to exceed it in the next 30 days alone, you must register immediately. Late registration can result in penalties and backdated VAT charges. You can apply to deregister if your taxable turnover falls below £88,000.
Do I need to charge VAT on exports?▾
Exports of goods to non-UK countries are zero-rated for VAT. You do not charge VAT but must keep evidence of export. Services to non-UK businesses generally follow the "place of supply" rules and may also be outside the scope of UK VAT, depending on the type of service.

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