I've just recently moved to the UK from the USA and come to an agreement with my american company to continue on as a contractor. I'm making my way through the process of getting set up as a sole trader with national insurance number and everything. However, I'm getting stumped on how VAT will affect my monthly rate.
As far as I understand, if I have more then £85,000 in turnover, i have to pay vat on ALL revenue, not just the amount over 85 grand. So am I correct that with regards to my old company in america, i need to either charge them
less than £7,083 per month
or
greater than £7,084 + 20% = £8501 per month
And anything in between those 2 amounts I would actually be losing money? This seems crazy to me so I'm wondering if I'm missing something crucial here?
As far as I understand, if I have more then £85,000 in turnover, i have to pay vat on ALL revenue, not just the amount over 85 grand. So am I correct that with regards to my old company in america, i need to either charge them
less than £7,083 per month
or
greater than £7,084 + 20% = £8501 per month
And anything in between those 2 amounts I would actually be losing money? This seems crazy to me so I'm wondering if I'm missing something crucial here?
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