VAT Flat Rate Scheme Calculator for Accountancy or book-keeping
For sole-practitioner accountants, bookkeepers, payroll bureaux, and small accountancy firms registered for VAT.
Why this matters for accountancy or book-keeping
Accountancy and bookkeeping share IT consultancy's 14.5% FRS rate but face the same Limited Cost Trader risk: most spend is on professional indemnity insurance, software (Xero, QuickBooks, Sage), and CPD — all services. Practical office costs (paper, toner) rarely exceed the £1,000 / 2% goods threshold.
A sole practitioner billing £70,000 net to clients usually reclaims £200–£500 input VAT under Standard. At a 2.6% break-even threshold, FRS at 14.5% wins only if input VAT stays under £1,820.
Limited Cost Trader trap
High risk — most caughtProfessional indemnity insurance, accountancy software, ICAEW/ACCA fees, and training all count as services for LCT purposes — not goods. A sole-practitioner accountant with negligible physical office consumables will almost certainly be a Limited Cost Trader and end up on the 16.5% rate.
Calculator (pre-selected for accountancy or book-keeping)
HMRC publishes 51 sector rates from 4% (food retail) to 14.5% (IT, accountancy, legal). Pick the one that best matches your main business activity.
Joining threshold: £150,000.
The 20% VAT on your business purchases (software, equipment, professional fees, stock). Leave blank or use 0 for service businesses with low purchases.
Goods only — excludes services, capital items, food/drink for staff, fuel (except transport sector). If this is below 2% of your gross turnover OR below £1,000/year, your rate becomes 16.5%.
Accountancy or book-keeping
16.5%
Industry base rate
14.5%
Limited Cost Trader
16.5% (override)
First-year discount
Not applied
Standard scheme — VAT to HMRC
£11,500.00£12,000.00 output − £500.00 input
FRS — VAT to HMRC
£11,880.00£72,000 gross × 16.5%
Annual difference
-£380.00
Standard pays HMRC less
Stay on the Standard scheme. You reclaim more input VAT than FRS would save you — switching would cost £380.00 per year.
Break-even: at input VAT of £120 (0.2% of net turnover), the two schemes pay HMRC the same. Below that, FRS wins; above, Standard wins.
Worked example: £60,000 net turnover
Output VAT charged
£12,000
£60,000 × 20% (what customers pay you in VAT)
FRS payable to HMRC
£10,440
£72,000 gross × 14.5%
Break-even input VAT
£1,560
2.6% of £60,000 net — below this, FRS wins
In your first year of VAT registration, the 1% discount drops your effective rate from 14.5% to 13.5%, raising the break-even threshold to 3.8% of net turnover. Use the calculator above with your actual turnover and input VAT figures.
Frequently asked questions
Does my professional indemnity insurance count toward the Limited Cost Trader goods test?
I run a small accountancy firm with several employees. Does the LCT rule still apply at firm level?
What is the FRS rate for accountancy or book-keeping?
What is the break-even input VAT for accountancy or book-keeping on FRS?
Related industry guides
Sources
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