[kiral1404]

Hi soory to bring this up again

I'm gonna use round figures to make life easy

If I were to earn 40k a year i would have to pay 7k vat (£1,750 a quarter)
Do i still have to pay income tax on the remaining 40k or
do i pay income tax on the 47k less vat payments

Haven't got my head round this one yet

Moving soon and setting up a new round but i'm wondering just how far to take my business

Don't want to go vat reg unless i really go way over the vat limit

I feel like i'm gonna get stuck in limbo in the next year as i don't want the extra hassle vat brings

Work will be mainly domestics and i don't mind swallowing the vat as part of my fee.

Is VAT as bad as it seems?

Any opinions and facts gratefully received

Darren

[NWH]

You will still have to pay income tax on the remaining amount,after VAT.cheers.

[kiral1404]

Thats what i thought.

So if you include vat as part of your price for domestics you are effectively paying vat and then income tax on the remainder, almost double the price

[Ian Rochester]

Yep, that's what happens when you become a legitimate business and not just a cowboy after a bit of beer money!

[kiral1404]

So Lionheart everyone on here who isn't vat reg is a cowboy then

[Helen]

Darren, I believe the new threshold for Vat registration is £64k, so don't do it if it is not necessary.
You need to go on the H & M website and read up on Vat etc etc, there are different schemes and you choose the one that is suited to your business. You need to discuss this with your accountant too.
Swallowing vat for existing customers is very noble, but if you present it correctly to them, you should not have a problem. If you have a £100 customer pre vat, you get £100. Charging vat to the customer would make that price £117.50. If you don't charge it out and include the vat in the £100 price, you lose £14.90 (dependant on what scheme you go on)Multiply that out by 150 customers.... that is a big loss on your earnings.

[kiral1404]

Thanks Helen,

Wasn't overly intending on registering but if i did find myself getting close to the threshold then i'd want to really go over it and not by a few grand. Just trying to work out whether to stay safe or really go for it

Yee Haaa