Hammond To Reduce VAT Threshold In Budget?
Discussion
mickytruelove said:
Soon it will be every company needs to be VAT registered..... apart from chinese companies with their stock in the UK, they can continue to take the piss.
VAT absolutely kills the profit in my business, I cannot add 20% to prices when chinese sellers are paying no Vat and no corp tax. I have to absorb it in the price of the products .This is just one type of business (ecommerce).
All companies being VAT registered would help in that situation. It would be very easy to prove VAT fraud as every UK to UK supply would be subject to VAT. VAT absolutely kills the profit in my business, I cannot add 20% to prices when chinese sellers are paying no Vat and no corp tax. I have to absorb it in the price of the products .This is just one type of business (ecommerce).
hyphen said:
powerstroke said:
PurpleMoonlight said:
alock said:
I'm PAYE but write and sell software through my own LTD in my spare time. I have very few expenses to produce my product.
I'm soon going to have to pay VAT alongside the corporation tax and dividend tax I already pay? I don't know why I bother trying.
You won't pay VAT, you will collect it for HMRC by charging it to your customers.I'm soon going to have to pay VAT alongside the corporation tax and dividend tax I already pay? I don't know why I bother trying.
A small bedroom software company like OP's will be on flat rate.
I think it will harm the economy just when we don't need it to be damaged. Furthermore, as we are (with luck) going to leave the EU why try to copy what it does? This is the time to take an advantage not fall in line.
Hammond is a pro-EU wet; I suspect it's more for personal agenda resaons than sound economic ones.
Hammond is a pro-EU wet; I suspect it's more for personal agenda resaons than sound economic ones.
Douglas Quaid said:
I think it’s a great idea. But then I’m already vat registered, like everyone else on here.
A long way from everyone I'd say.I'm not, legit under threshold as are many I know, have pondered registering are pros & cons to both.
A non paywall link from ft-
https://www.google.co.uk/amp/s/amp.ft.com/content/...
Welshbeef said:
Choosing to use a company or self employed not vat registered over one that is is tax avoidance.
The thing here though it’s generally the less well off who are using this lookhole not the wealthy
It’s reqlly not. It’s a business decision based on the legal limits.The thing here though it’s generally the less well off who are using this lookhole not the wealthy
Unles someone cheats.
This would destroy profits for many small B2C service companies (IE companies that do not have big costs, just charge for a service or experience)
EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
iguana said:
Still pay-walled.Can someone just copy the damn content?!!?!!?
surveyor said:
Welshbeef said:
Choosing to use a company or self employed not vat registered over one that is is tax avoidance.
The thing here though it’s generally the less well off who are using this lookhole not the wealthy
It’s reqlly not. It’s a business decision based on the legal limits.The thing here though it’s generally the less well off who are using this lookhole not the wealthy
Unles someone cheats.
Joe public wants his grass cut same hourly rate but one is VAT registered the other not. Joe public can avoid tax by choosing the non vat registered solution.
For my buy to let’s i use non VAT registered plumber and Electrician - purely to reduce the cost.
Welshbeef said:
surveyor said:
Welshbeef said:
Choosing to use a company or self employed not vat registered over one that is is tax avoidance.
The thing here though it’s generally the less well off who are using this lookhole not the wealthy
It’s reqlly not. It’s a business decision based on the legal limits.The thing here though it’s generally the less well off who are using this lookhole not the wealthy
Unles someone cheats.
Joe public wants his grass cut same hourly rate but one is VAT registered the other not. Joe public can avoid tax by choosing the non vat registered solution.
For my buy to let’s i use non VAT registered plumber and Electrician - purely to reduce the cost.
Also - there is ABSOLUTELY nothing wrong with tax avoidance.
I'm above the VAT threshold anyway, so it makes no direct difference to me.
But I've always thought it a good idea to reduce the tax burden in terms of payment and the bureaucratic overhead for small businesses if you want to encourage those businesses to start and grow.
I genuinely don't understand the current focus on hitting these small businesses when the very largest seem to be getting a much better deal.
But I've always thought it a good idea to reduce the tax burden in terms of payment and the bureaucratic overhead for small businesses if you want to encourage those businesses to start and grow.
I genuinely don't understand the current focus on hitting these small businesses when the very largest seem to be getting a much better deal.
Flat-6 said:
This would destroy profits for many small B2C service companies (IE companies that do not have big costs, just charge for a service or experience)
EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
Forgive me for sounding mean, however there's a certain level of 'so what' in me about this. You currently gain an advantage in what you charge out and lose one on what you pay for goods and services, compared to VAT registered businesses. If the VAT position is make or break for your entire business, you have to ask how viable is it?EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
janesmith1950 said:
Forgive me for sounding mean...
This is akin to starting an insult with "No offence but..."Presumably you have no concept of "making profit" - A principal on which ALL businesses (should) be based.
"Make or break"?
The business is 100% viable either way, but 20% (eg) less profitable if I had to register for VAT.
Edited by Flat-6 on Monday 13th November 11:40
janesmith1950 said:
Flat-6 said:
This would destroy profits for many small B2C service companies (IE companies that do not have big costs, just charge for a service or experience)
EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
Forgive me for sounding mean, however there's a certain level of 'so what' in me about this. You currently gain an advantage in what you charge out and lose one on what you pay for goods and services, compared to VAT registered businesses. If the VAT position is make or break for your entire business, you have to ask how viable is it?EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
16.7% can kill that margin very easily if it can't be passed on due to market competition from those who are not vat registered...
if VAT only applied to the turnover of the business above the threshold, then it would be a different issue - but unlike income tax where higher rates apply only from that threshold onwards, VAT applies across the board - so, a business bringing in £80k p/a with a margin of 40% would give £32k - def. could live on that... move to £83k and not able to pass on the VAT - you now pay out VAT of £13,834 leaving you £18,166 to live on... so your monthly profit has just dropped from £2,667 to £1,514 - a drop of £1,153 p/m or 43% - def. not affordable for many people to receive that drop in income... (figures simplified, other taxes and costs may apply)
of course, for some businesses there may be costs on which VAT can now be recovered - but many small businesses are consultancy / time based... so may not have that advantage...
janesmith1950 said:
Forgive me for sounding mean, however there's a certain level of 'so what' in me about this. You currently gain an advantage in what you charge out and lose one on what you pay for goods and services, compared to VAT registered businesses. If the VAT position is make or break for your entire business, you have to ask how viable is it?
Assume higher rate PAYE and side business turning over £20k extra per year. Minimal costs due to providing labour or products produced from scratch such as software. The below is not far off my real-world numbers.Currently (on 2018 rates):
£20000 income
£1000 costs
£19000 gross profit
£3610 corporation tax @ 19%
£15390 net profit all paid as dividend
£2000 tax free dividends
£4352 tax @ 32.5% on remaining dividends
Total I get to spend on toys = £11038
Proposed (on 2018 rates):
£20000 income
£16667 after paying VAT
£833 costs (assuming I could reclaim VAT on all costs and my accountant doesn't charge anymore now I'm VAT registered!)
£15834 gross profit
£3008 corporation tax @ 19%
£12826 net profit all paid as dividend
£2000 tax free dividends
£3518 tax @ 32.5% on remaining dividends
Total I get to spend on toys = £9308
I sometimes wonder why I bother.
(My back-of-an-envelope calculations above might be wrong. I pay someone to do this for real.)
mickytruelove said:
Soon it will be every company needs to be VAT registered..... apart from chinese companies with their stock in the UK, they can continue to take the piss.
VAT absolutely kills the profit in my business, I cannot add 20% to prices when chinese sellers are paying no Vat and no corp tax. I have to absorb it in the price of the products .This is just one type of business (ecommerce).
Exactly this.VAT absolutely kills the profit in my business, I cannot add 20% to prices when chinese sellers are paying no Vat and no corp tax. I have to absorb it in the price of the products .This is just one type of business (ecommerce).
People saying that it makes it a fairer system if we scrapped it are basically fools. We all started out somewhere and that time period in which you dont need to pay that extra money or take on that burden is a good help. If anything it should be raised to help businesses get off the ground.
We bloody pay enough as it is.
In typical fashion the gov looks to the little person to balance up their books.
Flat-6 said:
This would destroy profits for many small B2C service companies (IE companies that do not have big costs, just charge for a service or experience)
EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
Wouldn't the "going rate" increase to £15.00 though as all similar businesses would also need to register for VAT and would be in the same position?EG my new venture would be hit hard - Paintball.
I have chosen NOT to register for VAT because that would mean charging it on entry fees.
The entry price is pretty much fixed at £12.50 per person (lets forget profit on actual paintballs for now, as I will mostly hose walk-on events), this cannot go up if I add VAT as it's "the going rate", so would immediately only see £10.42pp.
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