VAT and tax % ??

[kesm]

Hi all,

One of my friends asked me 2 questions today, to which i did not know the answer... Could you help?

1) How much VAT I will have to pay
2) What tax range do I belong to? i.e. Do I get taxed 30% for example?

many thanks all.

[vhadiant]

A bit tipsy but I will try ...

VAT ... assuming you're an IT contractor, the value is %17.5 of your invoice. If you're on flat rate scheme you'll pay 12% of your gross for the first year then it will increase to 13%.

For example:

Invoice: £10,000
VAT: £ 1,750

The amount you need to pay HMRC: 11750 * 0.012 = £1410

2) Assuming you're talking about personal tax have a look here:
http://www.hmrc.gov.uk/rates/it.htm

I don't know where that 30% come from.

[NotAllThere]

30% big co corp tax (for those that actually pay any)?

You should reply to your friend that you are taxed as normal on all your income. Your PAYE income is taxed in the same way as an permie. Your dividend income is taxed in the same way as anyone who gets dividend income.

Your company, being a small company with a low turnover, pays the small company tax rate on any profits. 22% now, or something? I lose track.

[chris79]

for 2007/2008 small company rate is 20%, but it will rise up to 22% by 2009 from memory...

http://www.hmrc.gov.uk/rates/corp.htm

[r0bly0ns]

yep, 19% last year, 20% this year, going up 1% per year till it hits 22%

[NickFitz]

yep, 19% last year, 20% this year, going up 1% per year till it hits 22%

...after which they'll change the rules again; rinse and repeat until they get it to 40%, by which time they'll have totally destroyed all entrepeneurial spirit in this country, which they will then blame on the educational system, or more specifically, the teachers

[Bluebird]

Hi all,

One of my friends asked me 2 questions today, to which i did not know the answer... Could you help?

1) How much VAT I will have to pay
2) What tax range do I belong to? i.e. Do I get taxed 30% for example?

many thanks all.

VAT you charge on top and then pay to HMRC - so you never lose with VAT - as detailed below you can gain if you use FRS.

CT is a deduction of your profit, so you lose out from that, however any expenses you incur come off before tax, so are effectivly tax free.

[kesm]

VAT you charge on top and then pay to HMRC - so you never lose with VAT - as detailed below you can gain if you use FRS.

CT is a deduction of your profit, so you lose out from that, however any expenses you incur come off before tax, so are effectivly tax free.

Thank you all for your answers.
You mention FRS and CT, what do they stand for?
Is CT Corporate Tax?

Many thanks.

[kesm]

A bit tipsy but I will try ...

VAT ... assuming you're an IT contractor, the value is %17.5 of your invoice. If you're on flat rate scheme you'll pay 12% of your gross for the first year then it will increase to 13%.

For example:

Invoice: £10,000
VAT: £ 1,750

The amount you need to pay HMRC: 11750 * 0.012 = £1410

2) Assuming you're talking about personal tax have a look here:
http://www.hmrc.gov.uk/rates/it.htm

I don't know where that 30% come from.

I had a look at the http://www.hmrc.gov.uk/rates/it.htm
I earn more than 34,600, so I get taxed 40% on my salary?

[vhadiant]

I had a look at the http://www.hmrc.gov.uk/rates/it.htm
I earn more than 34,600, so I get taxed 40% on my salary?

Are you running a business or a salaried employed? The income for the business (is: your Ltd. Co.) is not your money, it is company money. Thus you pay corporation tax on it. Say you take the rest of the dividend, the dividend becomes your money and it will be taxed on the dividend's rate.


This: http://www.hmrc.gov.uk/rates/it.htm is income tax rates. This is what you will pay on your salary. If you pay yourself £80,000 per year as a salary from your Ltd. Co well then yes, you'll get taxed at 40% at the highest tax bracket, but only at your highest tax bracket. Use this to help: http://www.listentotaxman.com/