Autumn statement - end of VAT flat rate scheme?

[northernladuk]

Ok - so let me just check this.

Currently I earn 100k - Plus 20% VAT and I pay 14.5% of that 20% to Gov.

In April 2017 I earn 100k + 20% VAT but pay 16.5% on £120k to Gov ?

I've just done my final year accounts and as expected my CT has increased by £5k + I have 2k on account to pay.

:-(

You do know the name of your accountant don't you?

[radish2008]

You do know the name of your accountant don't you?

You know you can't win sometimes with you, you miserable ****er.

I'm going standard. Next year. I do need a tax efficiency overview though. Not sure what else I can do.

[stek]

Ok - so let me just check this.

Currently I earn 100k - Plus 20% VAT and I pay 14.5% of that 20% to Gov.

In April 2017 I earn 100k + 20% VAT but pay 16.5% on £120k to Gov ?

I've just done my final year accounts and as expected my CT has increased by £5k + I have 2k on account to pay.

:-(

You don't pay VAT on personal earnings. Are you getting confused with income tax?

[FrontEnder]

I currently rent while I'm staying away (no vat), I'm thinking it might be be better to stay in a hotel even though it will cost more and move onto standard vat. Will have to crunch the numbers.

[radish2008]

You don't pay VAT on personal earnings. Are you getting confused with income tax?

No, not confused. It's income tax. Was just having a general whinge about the extra tax going out this year.

[stek]

No, not confused. It's income tax. Was just having a general whinge about the extra tax going out this year.

You are very confused I'm afraid.

[DaveB]

Which is £200 difference between the 20% collection rate and 16.5% payment rate over your £100k annual turnover.

So if the difference between your vat in and vat out on your receipts is greater than £200 your are better off on the std rate vat scheme.

For example a hotel charges £50 per night. You stay 4 nights per week that is £200 per week including VAT. Ex VAT is £166.67.

That means that weekly VAT in/out delta on this very very simple model is £33.33 per week. Which means you only need 6 weeks in the hotel to make the std VAT rate look attractive.

Then add in ~£30 pa extra vat on £99 pcm accountancy services, plus VAT on insurances, contract reviews etc. It's marginal at best without the additional costs of working away. It wouldn't take much for Std Rate and claiming everything back to be a better option.

[TheCyclingProgrammer]

Then add in ~£30 pa extra vat on £99 pcm accountancy services, plus VAT on insurances, contract reviews etc. It's marginal at best without the additional costs of working away. It wouldn't take much for Std Rate and claiming everything back to be a better option.

I would be surprised if *any* contractor/freelancer who falls under the definition of "limited cost" trader would make anything other than a net loss on the FRS. £200 allowance on £100k turnover - and some don't even turnover that much - would be wiped out in an instant by accountancy fees alone. It would only take £1000 of expenditure on services over the course of the year to use that allowance up.

[psychocandy]

Yes it was a bit of an "extra" but its more pennies being scratched back off us.
I reckon on £500/day its about £12 gross.
Like others have said, on 16.5% you make very little indeed. £1 on £500 a day I reckon roughly.

Based on 20 days thats £20 a month. Surely you've just got to spend £100 on the standard vat system to make it worth leaving flat rate now?

Accountants fees for a start? Hotels etc....

[TheCyclingProgrammer]

Yes it was a bit of an "extra" but its more pennies being scratched back off us.
I reckon on £500/day its about £12 gross.
Like others have said, on 16.5% you make very little indeed. £1 on £500 a day I reckon roughly.

Based on 20 days thats £20 a month. Surely you've just got to spend £100 on the standard vat system to make it worth leaving flat rate now?

Accountants fees for a start? Hotels etc....

Is there an echo in here...