We use technologies, such as cookies, to customise content and advertising, to provide social media features and to analyse traffic to the site. We also share information about your use of our site with our chosen social media, advertising and analytics partners. Read our cookie policy for more information.

Value Added Tax

What you need to know

On these pages you will find information about:

  • VAT flat rate scheme

Registration for VAT can be compulsory or voluntary. Once registered, you can then claim back the VAT which you are charged on things like telephones, instruments, etc, that are used in your business, but it means that you will also have to charge VAT on your fee for every gig, arrangement, etc, and handle all of the considerable bookwork involved. 

It is wise to first consult an accountant, who will examine and explain the benefits and pitfalls of VAT Registration and the accounting system to be employed. 

Beware of the implications of Scale Charges for motoring costs if you reclaim VAT on petrol. 

Making Tax Digital for VAT 

Making Tax Digital (MTD) for VAT was introduced with effect from VAT periods which began after 1 April 2019. This requires all VAT registered persons with a taxable turnover in excess of £85,000 to submit MTD compliant VAT returns via a new API link. In practice, most small businesses are using bridging software to meet this requirement rather than maintaining digital VAT records. 

Any business that is VAT registered and has a taxable turnover of less than £85,000 does not need to sign up for MTD at this stage. 

VAT Flat Rate Scheme

This scheme is for businesses, individuals etc with an annual vatable turnover of £150,000 or less and allows for a simplification of the calculations required so that VAT liability can be determined as a percentage of turnover. It can be beneficial for small businesses. However, the Flat Rate Scheme percentages increased with effect from 1 April 2017 and the scheme is less beneficial thereafter.