Hammond To Reduce VAT Threshold In Budget?
Discussion
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.
fishseller said:
But say your margins are to the bone and struggle to sell your product at the price point it is at, then then how can you up the price by 20% no one will purchase so either take an extra 20% loss or shut shop I think a lot of small enterprises will do just that.
Won't the competition likely be in the same boat?So prices across the board will increase by 20%.
PurpleMoonlight said:
fishseller said:
But say your margins are to the bone and struggle to sell your product at the price point it is at, then then how can you up the price by 20% no one will purchase so either take an extra 20% loss or shut shop I think a lot of small enterprises will do just that.
Won't the competition likely be in the same boat?So prices across the board will increase by 20%.
It also depends if you are competing with sellers from the likes of China. They don’t worry about nonsense like VAT as it’s the buyer’s responsibility if it gets stopped by customs on the way in.
That’s almost 17% off U.K. sellers profits before we even think about eBay and PayPal fees and other costs.
I think also the Chinese et al have massive buying power so can offer lower prices than we can buy for.
That said, I’m clearing a load of stock off at well under cost price as it’s been sitting around for too long. Unfortunately my supplier released an upgraded model shortly after I bought my last batch, which rendered mine pretty much obsolete.
That’s almost 17% off U.K. sellers profits before we even think about eBay and PayPal fees and other costs.
I think also the Chinese et al have massive buying power so can offer lower prices than we can buy for.
That said, I’m clearing a load of stock off at well under cost price as it’s been sitting around for too long. Unfortunately my supplier released an upgraded model shortly after I bought my last batch, which rendered mine pretty much obsolete.
mickmcpaddy said:
Can you still claim back the previous 5 years of VAT you have paid when you register.
not that simple, depends what the item was and whether you still have full use... e.g. If you buy a pack of 100 pencils but have used 50 before you register, you could reclaim half the VAT...akirk said:
mickmcpaddy said:
Can you still claim back the previous 5 years of VAT you have paid when you register.
not that simple, depends what the item was and whether you still have full use... e.g. If you buy a pack of 100 pencils but have used 50 before you register, you could reclaim half the VAT...akirk said:
mickmcpaddy said:
Can you still claim back the previous 5 years of VAT you have paid when you register.
not that simple, depends what the item was and whether you still have full use... e.g. If you buy a pack of 100 pencils but have used 50 before you register, you could reclaim half the VAT...singlecoil said:
As a kitchen maker I usually let it slip that I trade just under the VAT limit. Customers seem to like that, it helps explain why my stuff is such remarkably good value
And you're not reclaiming VAT on your purchased materials, machinery or running costs, unlike those tax avoiding VAT registered Companies. Despite what Welshbeef thinks.C Lee Farquar said:
singlecoil said:
As a kitchen maker I usually let it slip that I trade just under the VAT limit. Customers seem to like that, it helps explain why my stuff is such remarkably good value
And you're not reclaiming VAT on your purchased materials, machinery or running costs, unlike those tax avoiding VAT registered Companies. Despite what Welshbeef thinks.thinking about it, if you're not vat registered then you don't have to pay tax and national insurance on this amount which is more than 20% but if you claim the vat back then you only get 20% back, am I wrong?
mickmcpaddy said:
C Lee Farquar said:
singlecoil said:
As a kitchen maker I usually let it slip that I trade just under the VAT limit. Customers seem to like that, it helps explain why my stuff is such remarkably good value
And you're not reclaiming VAT on your purchased materials, machinery or running costs, unlike those tax avoiding VAT registered Companies. Despite what Welshbeef thinks.thinking about it, if you're not vat registered then you don't have to pay tax and national insurance on this amount which is more than 20% but if you claim the vat back then you only get 20% back, am I wrong?
fishseller said:
mickmcpaddy said:
Well if you vat registered and you pay £10+vat for something you claim back the £2 and put £10 against your profits for income tax and national insurance.
However if you are not vat registered you claim £12 against income tax and NI.
Correct However if you are not vat registered you claim £12 against income tax and NI.
mickmcpaddy said:
fishseller said:
mickmcpaddy said:
Well if you vat registered and you pay £10+vat for something you claim back the £2 and put £10 against your profits for income tax and national insurance.
However if you are not vat registered you claim £12 against income tax and NI.
Correct However if you are not vat registered you claim £12 against income tax and NI.
Using your example above, and assuming tax is 20%, employers NI is 13.8%:
Non VAT Reg you effectively get 33.8% back, which is £4.05 on the original £12.00
VAT Reg you get your £2.00 VAT plus 33.8% of the remaining £10.00 giving you a total of £5.38 back.
Assuming my maths and assumptions are correct of course.
ETA: Employers NI might actually be employees if you are a sole trader. I don’t know if this is correct as I’ve not done the sole trader thing since at least 2005. The principle is exactly the same anyway, all it means is that the totals will be different by the same proportion.
Edited by Super Slo Mo on Sunday 19th November 05:35
fishseller said:
mickmcpaddy said:
Well if you vat registered and you pay £10+vat for something you claim back the £2 and put £10 against your profits for income tax and national insurance.
However if you are not vat registered you claim £12 against income tax and NI.
Correct However if you are not vat registered you claim £12 against income tax and NI.
singlecoil said:
fishseller said:
mickmcpaddy said:
Well if you vat registered and you pay £10+vat for something you claim back the £2 and put £10 against your profits for income tax and national insurance.
However if you are not vat registered you claim £12 against income tax and NI.
Correct However if you are not vat registered you claim £12 against income tax and NI.
If that matches the vat inclusive price the non vat registered sellers profit is greater.
If that is the vat exclusive price the non vat registered sellers profit is less.
PurpleMoonlight said:
singlecoil said:
fishseller said:
mickmcpaddy said:
Well if you vat registered and you pay £10+vat for something you claim back the £2 and put £10 against your profits for income tax and national insurance.
However if you are not vat registered you claim £12 against income tax and NI.
Correct However if you are not vat registered you claim £12 against income tax and NI.
If that matches the vat inclusive price the non vat registered sellers profit is greater.
If that is the vat exclusive price the non vat registered sellers profit is less.
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