VAT Flat Rate Scheme Calculator for Management consultancy
For solo strategy / operations / change consultants and boutique consulting firms registered for VAT.
Why this matters for management consultancy
Management consultancy sits at 14% under FRS — slightly below IT and accountancy. The break-even input VAT is 3.2% of net turnover. With most expenses (travel, accommodation, conferences, research subscriptions) being services, Limited Cost Trader risk is high.
A solo consultant billing £120,000 net typically reclaims £600–£1,500 input VAT (laptop, accountancy software, occasional equipment). FRS at 14% wins only if input VAT stays under £3,840.
Limited Cost Trader trap
High risk — most caughtTravel, accommodation, conferences, research subscriptions, and coaching are all services for LCT purposes. Most independent consultants fail the goods threshold and end up on the 16.5% Limited Cost rate, where Standard is the better choice.
Calculator (pre-selected for management consultancy)
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%.
Management consultancy
16.5%
Industry base rate
14.0%
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
£10,080
£72,000 gross × 14.0%
Break-even input VAT
£1,920
3.2% of £60,000 net — below this, FRS wins
In your first year of VAT registration, the 1% discount drops your effective rate from 14.0% to 13.0%, raising the break-even threshold to 4.4% of net turnover. Use the calculator above with your actual turnover and input VAT figures.
Frequently asked questions
Does paid market research (e.g. Gartner, IDC subscriptions) count for the LCT goods test?
No. Research subscriptions and report purchases are services, not goods, regardless of cost. Even a £5,000/year Gartner subscription contributes nothing toward escaping the Limited Cost Trader 2% / £1,000 goods threshold.
Should a small consulting firm with 3-4 partners use FRS?
Probably not. As partner count grows, support-staff costs (which are mostly salaries, outside VAT) and shared services like office rent (often VAT-exempt) mean the goods test remains hard to clear. Standard scheme combined with proper input VAT tracking usually wins for any consultancy with >£200k revenue.
What is the FRS rate for management consultancy?
HMRC publishes a flat rate of 14.0% for "Management consultancy" under the VAT Flat Rate Scheme. In your first year of VAT registration, the 1% discount drops it to 13.0%. 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 management consultancy on FRS?
At a 14.0% FRS rate, the Standard scheme pays HMRC the same as FRS when input VAT equals 3.2% 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 £1,920.