Your VAT taxable turnover must be £150,000 or less to join the scheme, excluding VAT, and you apply to HMRC with your VAT registration details.

You pay VAT at a fixed rate based on your business sector—percentages range from 4% to 14.5%, with HMRC providing a full list online.

You cannot reclaim VAT on most purchases, except for certain capital assets costing over £2,000 plus VAT, such as equipment or vehicles.

The scheme includes a 1% discount on the flat rate for the first year as a VAT-registered business, which can reduce your initial payments.

You must leave the scheme if your turnover exceeds £230,000 in a year, and you need to notify HMRC promptly to avoid errors.

Flat rate percentages vary by sector; for example, 12.5% for management consultancy, 14.5% for construction, and 6.5% for retail not including food.

You still issue VAT invoices to customers at the standard rate, but you pay HMRC based on your flat rate percentage applied to your turnover.

Record-keeping is simpler, but you must keep accurate records of your turnover, VAT payments, and any relevant invoices for at least six years.

The scheme is optional—you can choose to stay on standard VAT accounting if it better suits your business, especially if you have high VAT reclaims.

HMRC updates sector percentages periodically, so check regularly to ensure you're using the correct rate for your business activities.