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?
No. Insurance is a service, not goods, and does not count toward the £1,000 / 2% Limited Cost goods threshold. Many sole-practitioner accountants discover this only after joining FRS and realising the 16.5% rate now applies.
I run a small accountancy firm with several employees. Does the LCT rule still apply at firm level?
Yes — the LCT test is applied at the VAT-registered entity level, regardless of headcount. A 5-person firm is treated the same as a sole practitioner: if the firm's annual goods spend is below 2% of VAT-inclusive turnover or £1,000/year, the 16.5% rate applies.
What is the FRS rate for accountancy or book-keeping?
HMRC publishes a flat rate of 14.5% for "Accountancy or book-keeping" under the VAT Flat Rate Scheme. In your first year of VAT registration, the 1% discount drops it to 13.5%. If your business is classed as a Limited Cost Trader (goods spend below 2% of VAT-inclusive turnover or below £1,000/year), the rate becomes 16.5% regardless of sector.
What is the break-even input VAT for accountancy or book-keeping on FRS?
At a 14.5% FRS rate, the Standard scheme pays HMRC the same as FRS when input VAT equals 2.6% of net turnover. Below that threshold, FRS pays HMRC less; above it, Standard wins. For a £60,000 net-turnover business, break-even input VAT is £1,560.