VAT Flat Rate Calculator

VAT Flat Rate Calculator

Personal Vs LTD
It is a type of indirect consumption tax imposed on the value added to goods or services, specifically during different stages of the supply chain, which may include production, wholesale, distribution, supply, or any other stages that add value to a product.
What is Personal Vs LTD Calculator
Value added tax (VAT), is a consumption tax; it is applied to goods and services, which is why it is known as goods and services tax (GST) in some countries such as Australia, Canada, New Zealand, and Singapore. The name refers to the fact that it is a tax on the “added value”, i.e. the sale price of a product after deducting the cost of materials and other taxable inputs (see below for an example). Another form of consumption tax is the sales tax.
What is the difference between VAT/GST and sales tax?

VAT/GST applies to every stage of production of goods and services (therefore called a multi-stage tax) and is calculated based on the “added value” only. It means that each participant in the production chain pays VAT only for the “added value” they create. This process goes on until the product reaches its final recipient — the customer. He/she does not produce any “added value”, therefore it is he/she who is the ultimate bearer of the tax burden.

In contrast, the retail sales tax is a single-stage tax charged on the total value of sold goods or services when the sale takes place. Therefore it is paid only once in contrast to VAT, which is calculated multiple times.

How is VAT calculated?
Through a simple example, the below table illustrates the comparison between VAT and sales tax. Imagine a lumberjack cutting trees (without cost) who sells the wood (enough for one barrel) to a sawmill owner for $100. The sawmill owner cuts the wood into oak staves and sells it to the cooper for $150. The cooper then makes a barrel that he can sell for $300 to the retailer who eventually sells it to the customer for $350. The total VAT paid is $35 or 10% of the sum of values added at each stage. In the case of sales tax with the same 10% rate the paid tax is identical, however, it’s assessed only at the point of sale to the customer.
Stage Product Price Value Added 10% VAT 10% retail sale tax
1 Log €100 €100 €10
2 Stave €150 €50 €5
3 Barrel €300 €150 €15
4 Barrel €350 €1500 €5 €35
Total Tax €35 €35 €35
When do I owe VAT?
After selling an asset, you only owe Capital Gains Tax on profits above £6,000. Anything less than that is tax-free. When you earn more than £12,300 during a tax year, this is taxable income which you will need to declare to HMRC and file a tax return. Make sure you do this by 31st January the tax year after you profit.
In practice, here are the deadlines to be aware of:
2020 VAT Gains Tax changes
If you sell a residential property, you now need to declare your profits within 30 days and pay any tax you owe. It’s via a digital service called the Real Time Capital Gains Tax Service. The 30 day rule has been in place since 6th April 2020. If you don’t do this, you could face a fine from HMRC. Be aware that this includes both UK residents and those who own UK property but live abroad. Take a look at the following exceptions to these changes:
Do you owe VAT when you sell your home?
No. If you’re selling your main home, you don’t owe CGT. You only pay capital gains tax on property if you’re operating a buy-to-let business or have a second home that you’re selling.

You also don’t need to worry about paying any CGT on your rental income. You’ll owe Income Tax on this and CGT at the point at which you sell up (if you’re not also living in the house). Read more about rental income tax via our guides.
How can I reduce the VAT I owe?
Reducing the CGT you owe may be tricky. There’s no tax credit or tax relief associated with it, however you can claim the Capital Gains Tax allowance to reduce your tax liability. Every tax year, you can earn up to £6,000 tax-free (previously £12,300) in profit. Anything less than this means you won’t have to file a tax return.