VAT query

[Mor4]

Hi Guys

I have been told by Badenoch & Clarke the following :

I need to register for VAT , why ?

My ltd's gross won't be over £30,00.


Thanks

[Sockpuppet]

Hi Guys

I have been told by Badenoch & Clarke the following :

I need to register for VAT , why ?

My ltd's won't be over £30,00.


Thanks

Ok and again in English.

You don't need to register for VAT unless you earn over the threashold (somewhere north £60k afaik).

[Nixon Williams]

The current threshold is £67,000, however it can be worth registering even if you are under this as you can join the Flat Rate Scheme which would save you a nice sum.

The saving would depend on what it is you do, however if you are in IT, then the saving would be 3.4% in year 1, so say £1700 on a £50K turnover.

Alan

[Mor4]

The current threshold is £67,000, however it can be worth registering even if you are under this as you can join the Flat Rate Scheme which would save you a nice sum.

The saving would depend on what it is you do, however if you are in IT, then the saving would be 3.4% in year 1, so say £1700 on a £50K turnover.

Alan

so it would be worth it ?

how much would i save on £30k turnover.

[slackbloke]

so it would be worth it ?

how much would i save on £30k turnover.

Get a calculator and try 30000 * 0.034 !

[Mor4]

Sorry for being stupid lol

One final question :

Will i have to pay vat on my turnover ?

Thank you for your help

[Hex]

The way it works is like this:

You invoice the client at £2,500 per month plus VAT at 17.5% - so your invoice total is £2,500 + £437.50 = £2,937.50

You pay VAT to the VAT man at the rate of 12% (in year 1 and 13% thereafter) of the invoice total (i.e. the £2,937.50). So you pay him 0.12 * 2,937.50 = £352.50

So you're left with £2,937.50 - £352.50 = £2,585.00

So you're £85 on a £2,500 invoice better off than you would be if you didn't charge VAT.

[Mor4]

Thank you

Thanks Hex !!!!!

[Gonzo]

You should consider though how being VAT registered might affect your customers and your competitiveness becuase once you are VAT registered your prices go up by 17.5%.

If your customers are all businesses that are VAT registered they won't care because they simply reclaim any VAT they pay.

If your customers are the public then it means you prices become 17.5% higher overnight.

[[email protected]]

In most cases, being on the flat rate scheme is of financial benefit to the contractor. However, you should note that any vat you incur on your purchases cannot be reclaimed under this scheme. With the exception of capital purchases in excess of £2000 inc VAT.