[Dry Clean]

IMO every business should be vat registered, evens out the playing field, its unfair that my business has to pay vat and other window cleaners do not have to

I'm sure most if not all of the non VAT paying businesses will gladly swap their businesses with yours, you just need to ask.

No point now, they'll be paying vat too shortly.

Not really, according to HMRC the average self employed shiner is on around £25k or slightly less, VAT may drive some of these
guys to grow their rounds which wont be easy with that sort of turnover but many will cut back just under the £20k and probably make up the shortfall with tax credits and back handers.

[Arnold Palmer]

I've added a poll, how low would you go to avoid charging VAT?

[Stoots]

Wouldn't have much choice but to keep growing and charge vat. Not interested in staying a sole trader forever, of course would much prefer as high a VAT threshold as possible to prolong having to register. But if it becomes compulsory then would have no choice.

To answer the question of say 40k as that's about my limit as a sole trader or should I say the limit of how much I want to do solo.

[Dry Clean]

Wouldn't have much choice but to keep growing and charge vat. Not interested in staying a sole trader forever, of course would much prefer as high a VAT threshold as possible to prolong having to register. But if it becomes compulsory then would have no choice.

To answer the question of say 40k as that's about my limit as a sole trader or should I say the limit of how much I want to do solo.

Thing is Adam at £40k you would be well up there in this game but even you would find it hard to push on, for instance
your £40k will reduced to £32k because of vat add on £6k or £7k in expenses and your down to £25k before tax and NI, then take in the fact that an employee wouldn't be as motivated to hit the £40k mark as you would and so on, doesn't leave a lot of wriggle room when it comes to employing.

[Stoots]

Wouldn't have much choice but to keep growing and charge vat. Not interested in staying a sole trader forever, of course would much prefer as high a VAT threshold as possible to prolong having to register. But if it becomes compulsory then would have no choice.

To answer the question of say 40k as that's about my limit as a sole trader or should I say the limit of how much I want to do solo.

Thing is Adam at £40k you would be well up there in this game but even you would find it hard to push on, for instance
your £40k will reduced to £32k because of vat add on £6k or £7k in expenses and your down to £25k before tax and NI, then take in the fact that an employee wouldn't be as motivated to hit the £40k mark as you would and so on, doesn't leave a lot of wriggle room when it comes to employing.

Quite right.

What meant was a 40k vat threshold would do me in terms of being a sole trader, if it came down an lower say 20k then that would be too little for me to live on meaning I would have to go over it as couldn't afford to live under it...so what I mean is if it came down to 20k and I was going to over it I may as well employ and aim to grow unlimited as to turnover say 40k would be pointless as you rightly point out half of it would be gone.

[Pete Thompson]

Interesting...

I’m not VAT registered yet, but will probably go over the current threshold next year.

If the govt does lower the threshold, at least it will be national news. That means I’ll be able to add the price increase and custies will blame the govt not me.

And by the way, you’re not adding on 20%, because you can also reclaim the VAT on fuel and other purchases like poles etc. You’ll be adding on about 12%. So a £15 house will become £16.80, which is hardly a big deal.

However, since it’s the govt getting the blame you could just whack on the whole 20% and give yourself a little pay rise while you’re at it.

A few may cancel or reduce frequency, just replace em.

The only other cost is the additional admin of being vat registered. Bit of a pain in the neck.

[dd]

Interesting...

I’m not VAT registered yet, but will probably go over the current threshold next year.

If the govt does lower the threshold, at least it will be national news. That means I’ll be able to add the price increase and custies will blame the govt not me.

And by the way, you’re not adding on 20%, because you can also reclaim the VAT on fuel and other purchases like poles etc. You’ll be adding on about 12%. So a £15 house will become £16.80, which is hardly a big deal.

However, since it’s the govt getting the blame you could just whack on the whole 20% and give yourself a little pay rise while you’re at it.

A few may cancel or reduce frequency, just replace em.

The only other cost is the additional admin of being vat registered. Bit of a pain in the neck.

i must be missing something. Surely if you go VAT registered and charge £20 for a house you would need to add 20% so making the total price £24, but you only get to keep the £20 for yourself (although you still pay income tax and NI)

Or as in your example a £15 house surely becomes  £18 with VAT added.

Not everybody spends a lot on items which you can reclaim VAT on each year, and that involves even more paperwork. I claim a mileage allowance for my vehicle, as opposed to a percentage of fuel receipts and maintenance costs.

[Tom-01]

Interesting...

I’m not VAT registered yet, but will probably go over the current threshold next year.

If the govt does lower the threshold, at least it will be national news. That means I’ll be able to add the price increase and custies will blame the govt not me.

And by the way, you’re not adding on 20%, because you can also reclaim the VAT on fuel and other purchases like poles etc. You’ll be adding on about 12%. So a £15 house will become £16.80, which is hardly a big deal.

However, since it’s the govt getting the blame you could just whack on the whole 20% and give yourself a little pay rise while you’re at it.

A few may cancel or reduce frequency, just replace em.

The only other cost is the additional admin of being vat registered. Bit of a pain in the neck.

i must be missing something. Surely if you go VAT registered and charge £20 for a house you would need to add 20% so making the total price £24, but you only get to keep the £20 for yourself (although you still pay income tax and NI)

Or as in your example a £15 house surely becomes  £18 with VAT added.

Not everybody spends a lot on items which you can reclaim VAT on each year, and that involves even more paperwork. I claim a mileage allowance for my vehicle, as opposed to a percentage of fuel receipts and maintenance costs.

Yes that's correct, 20% paid on turnover. So a £16.80 house you will actually end up with £13.44 for that job.

Once you're set up expenses are a minimum so not much to claim back if you're a sole trader or a couple of you working.

[Pete Thompson]

i must be missing something. Surely if you go VAT registered and charge £20 for a house you would need to add 20% so making the total price £24, but you only get to keep the £20 for yourself (although you still pay income tax and NI)

Or as in your example a £15 house surely becomes  £18 with VAT added.

Not everybody spends a lot on items which you can reclaim VAT on each year, and that involves even more paperwork. I claim a mileage allowance for my vehicle, as opposed to a percentage of fuel receipts and maintenance costs.

Yes, but you can still claim the VAT element of the fuel.
http://www.tmtaccounting.co.uk/blog/can-i-reclaim-vat-paying-45p-mileage-allowance

Yes the rate is 20%, but after you've deducted the input vat from the output vat, you're really only handing over to HMRC about 12%.  So, if you wanted to keep everything exactly the same, you'd only need to increase your prices by that 12%.

So you work out the VAT on the fuel, the poles, the resin, the fairy liquid, cleaner planner, the workwear etc etc and it comes to about 8% of your turnover.  Therefore, since you can claim that back, you only need to increase your price by 12% in order to be in the same position as you were before vat registration.

Similarly, you could simply go onto the 12% flat rate scheme, where you don't claim anything back, you just pay 12% of your turnover,  and so (obviously) you only need to increase your prices by 12%.

[Og]

Don't forget the vat you can claim for years prior to registration. Innit.

[Spruce]

I'm not sure if this will make a drastic impact on people's lives or not. Our customers already pay VAT on most of the things they buy.

In our household we would have to pay the extra VAT on our window cleaning bill, yes. But the window cleaner is the most unreliable window cleaner we have ever had.
The wife would have to pay VAT on her 'mobile' hairdresser.
I expect I will have to pay VAT on my haircut at the local barber shop.

So all in all I can't think of anything else we would have to now pay VAT on.  So I will have to clean an extra house this month to cover that.

But as has been said, we can claim some VAT back on the fuel we use and on the equipment we need for window cleaning. The downside is that we will have to submit VAT returns to the Receiver every 3 months I think it is. I'm not sure if this means we have to get an accountant to verify this or not. Its just more paper work for us and higher costs.

We may loose some customers who over react but I can't see it will be many.  We had a few loose their jobs in the aftermath of the financial downturn in 2008, but some wives said he will go without his beer before I go without my windows cleaned.

We still have a large portion of our customers paying us cash.  Adding VAT onto an £8.00 job means we will now have to carry as assortment of small change which we don't do now.

At the tail end of the day, it means more work for us. As for the receiver, he is going to be able to more easily identify the 'cash in hand' operators.

[Dry Clean]

It wont make a difference to the cash in hand operators, the powers that be cant prove that they're doing it now, adding vat
into the mix wont change that, the more likely outcome is you will get more shiners willing to accept cash in hand and more customers willing to pay the guys doing it.
The hairdressing industry is a good example of what happens when the government gets too greedy, many now operate from home because they don't have to pay high business rates water charges and so on which in turn puts a strain on the legitimate operators still on the high street.

[NWH]

Full story here..https://www.pressreader.com/uk/the-daily-telegraph/20171104/281513636421195

Well thats going to have a big impact on the way we operate 

Why out of interest? it just something that would be passed on cost wise to the customer, why would that have a big impact on how you  operate ?

VAT isn't passed onto the customer it comes out of your pocket, example if a customer is happy to pay you £20 vat included
they would still be happy to pay £20 without vat.
In other words customers have no interest in how the money is divided up, taxes expenses and so on.

This response sums you up your now VAT registered so you have to take a 20% pay cut lol no wonder you bite at me on the money threads,the answer to becoming VATable is an issue for business it means you’ve got to put your prices up 20p in the £ not pay it for the customer 😂

[Dry Clean]

Full story here..https://www.pressreader.com/uk/the-daily-telegraph/20171104/281513636421195

Well thats going to have a big impact on the way we operate 

Why out of interest? it just something that would be passed on cost wise to the customer, why would that have a big impact on how you  operate ?

VAT isn't passed onto the customer it comes out of your pocket, example if a customer is happy to pay you £20 vat included
they would still be happy to pay £20 without vat.
In other words customers have no interest in how the money is divided up, taxes expenses and so on.

This response sums you up your now VAT registered so you have to take a 20% pay cut lol no wonder you bite at me on the money threads,the answer to becoming VATable is an issue for business it means you’ve got to put your prices up 20p in the £ not pay it for the customer 😂

Have you been drinking ? where has anybody said about taking a pay cut ? if I'm charging £16 and up my prices to £20
the customer can either pay it or not.
Its then me who has to pay the vat and not the customer or in other words I'm earning more money but I'm no better off,
if the customer was paying the vat then we wouldn't be able to claim some of it back on expenses.

[Walter Mitty]

i must be missing something. Surely if you go VAT registered and charge £20 for a house you would need to add 20% so making the total price £24, but you only get to keep the £20 for yourself (although you still pay income tax and NI)

Or as in your example a £15 house surely becomes  £18 with VAT added.

Not everybody spends a lot on items which you can reclaim VAT on each year, and that involves even more paperwork. I claim a mileage allowance for my vehicle, as opposed to a percentage of fuel receipts and maintenance costs.

Yes, but you can still claim the VAT element of the fuel.
http://www.tmtaccounting.co.uk/blog/can-i-reclaim-vat-paying-45p-mileage-allowance

Yes the rate is 20%, but after you've deducted the input vat from the output vat, you're really only handing over to HMRC about 12%.  So, if you wanted to keep everything exactly the same, you'd only need to increase your prices by that 12%.

So you work out the VAT on the fuel, the poles, the resin, the fairy liquid, cleaner planner, the workwear etc etc and it comes to about 8% of your turnover.  Therefore, since you can claim that back, you only need to increase your price by 12% in order to be in the same position as you were before vat registration.

Similarly, you could simply go onto the 12% flat rate scheme, where you don't claim anything back, you just pay 12% of your turnover,  and so (obviously) you only need to increase your prices by 12%.

If you are talking purely about money in and out, yes, you are correct.
But there's a bit more to it than that which might affect a sole trader disproportionately.

Getting home from work knackered. Must now calculate VAT as well as update records.

Must purchase special (duplicate or triplicate), numbered stationery at additional cost (currently, I just print my bills 2-up on A4 and guillotine them in half). Bills must be written out with addresses on (or possibly done the night before), Currently, I just fill in date and amount.

Submitting quarterly figure for VAT calculation.

Maybe I would deserve to charge the full 20% to compensate me for my additional time and pay for the stationery.

[Og]

Just print off aworka.

[Steve Newres]

Full story here..https://www.pressreader.com/uk/the-daily-telegraph/20171104/281513636421195

Well thats going to have a big impact on the way we operate 

Why out of interest? it just something that would be passed on cost wise to the customer, why would that have a big impact on how you  operate ?

VAT isn't passed onto the customer it comes out of your pocket, example if a customer is happy to pay you £20 vat included
they would still be happy to pay £20 without vat.
In other words customers have no interest in how the money is divided up, taxes expenses and so on.

This response sums you up your now VAT registered so you have to take a 20% pay cut lol no wonder you bite at me on the money threads,the answer to becoming VATable is an issue for business it means you’ve got to put your prices up 20p in the £ not pay it for the customer 😂

Have you been drinking ? where has anybody said about taking a pay cut ? if I'm charging £16 and up my prices to £20
the customer can either pay it or not.
Its then me who has to pay the vat and not the customer or in other words I'm earning more money but I'm no better off,
if the customer was paying the vat then we wouldn't be able to claim some of it back on expenses.

We've had this debate before. It is the customer's tax, but because of the fact that the majority of window cleaners are not VAT registered, it does make passing all of the VAT on quite challenging so the VAT registered business is forced to absorb it. If the playing field does get leveled then everyone will I'm certain just pass it straight on. Or at least they should otherwise it's a massive pay cut.

[Dry Clean]

Full story here..https://www.pressreader.com/uk/the-daily-telegraph/20171104/281513636421195

Well thats going to have a big impact on the way we operate 

Why out of interest? it just something that would be passed on cost wise to the customer, why would that have a big impact on how you  operate ?

VAT isn't passed onto the customer it comes out of your pocket, example if a customer is happy to pay you £20 vat included
they would still be happy to pay £20 without vat.
In other words customers have no interest in how the money is divided up, taxes expenses and so on.

This response sums you up your now VAT registered so you have to take a 20% pay cut lol no wonder you bite at me on the money threads,the answer to becoming VATable is an issue for business it means you’ve got to put your prices up 20p in the £ not pay it for the customer 😂

Have you been drinking ? where has anybody said about taking a pay cut ? if I'm charging £16 and up my prices to £20
the customer can either pay it or not.
Its then me who has to pay the vat and not the customer or in other words I'm earning more money but I'm no better off,
if the customer was paying the vat then we wouldn't be able to claim some of it back on expenses.

We've had this debate before. It is the customer's tax, but because of the fact that the majority of window cleaners are not VAT registered, it does make passing all of the VAT on quite challenging so the VAT registered business is forced to absorb it. If the playing field does get leveled then everyone will I'm certain just pass it straight on. Or at least they should otherwise it's a massive pay cut.

If it were a customer tax then every customer would have to pay it regardless of how the business is doing, the fact that it only
applies to a business with a certain turnover means its a tax on business, all they're talking about now is lowering the threshold to £20k which means it will still be business tax, it can only be a customer tax when every customer pays it. vat on goods is a
customer tax because we all have to pay it, how the seller is doing makes no difference.

[Arnold Palmer]

The story gains momentum.

https://www.ft.com/content/5aa111ce-c633-11e7-b2bb-322b2cb39656

And a new, lower threshold of 10k is mentioned.

 

[Walter Mitty]

The story gains momentum.

https://www.ft.com/content/5aa111ce-c633-11e7-b2bb-322b2cb39656

And a new, lower threshold of 10k is mentioned.

 

This smacks of petty revenge for not being allowed to increase N.I. contributions for the self-employed a while back.
If you don't want this, write to your MP.  I've started drafting a letter to mine (and cc'ing it to Hammond) and will send it in a few days.  Make it clear that you will not be voting for him/her or his/her party again (even if it's untrue).
It's hard to say but if increasing prices by 12% or 20% at a time when incomes are being squeezed and mortgage costs are beginning to nudge upwards, I  estimate I would lose a quarter of my business. That could be enough to finish me off unless I can persuade the card companies to take a haircut.
I would probably just give up, though it's difficult to see a viable alternative.