2 Your numbers for a yearUse your last 12 months, or your best estimate for the next 12. Round figures are fine.
Sales, excluding VAT
Everything you charge customers in a year, before any VAT is added. You can type 110000, 110,000 or 110k.
Purchases with VAT on the invoice, excluding the VAT
Stock, materials, equipment, software, phone, advertising and professional fees. Leave out wages, insurance, train and air fares, and rent unless your landlord charges VAT. Leave it empty if you have none.
Spending on goods, including VAT
Physical items used only in your business, such as the materials you use for your work. HMRC uses this to decide whether you pay the higher 16.5% flat rate.
What counts as goods?
Counts: materials you use to do your work, stationery, cleaning supplies, business-only gas and electricity, and stock you sell if selling goods is your main business.
Doesn’t count: goods you resell when selling isn’t your main business (for example, products a salon sells), services of any kind (rent, software subscriptions, advertising, accountancy, phone), equipment and other capital items, food and drink for you or your staff, and gifts or promotional items.
Vehicles and fuel count only if you run a transport business with your own or a leased vehicle.
3 How you work
Less common situations that rule schemes out
I’m behind with VAT returns or payments HMRC found a VAT offence, such as VAT evasion, in the last 12 months I left the Flat Rate Scheme in the last 12 months I left the Annual Accounting Scheme in the last 12 months My business is closely linked to another businessFor example, shared owners, staff or premises with another business you run. The business is part of a VAT group, or registered as a division In the last 24 months, the business was in a VAT group (or could have joined one), or was registered as a division I use the Capital Goods SchemeFor land or buildings costing £600,000 or more (£250,000 before 29 July 2026), or aircraft and boats costing £50,000 or more. The business is insolvent
