Reply to: First year FRS limit

[Lost It]

I've only ever got to just over a third of that level per day. I can't be working hard enough...

[MrMarkyMark]

Not necessarily - 200 days at 1k a day is 240K with standard rate VAT (assuming all work is VATable). Not sure about the rest of you, but 200 days is not exactly hardcore IMO. I understand that 1k may be a fairly high rate in IT, but not everyone here works in IT. Even in IT, I'm sure there's a reasonable number of folks earning at 1k or more - perhaps ~1-5% of them? You're unlikely to exceed the limit by simply working hard. Again, at the risk of talking from a bubble, I understand that 1k is an extraordinary amount for the average Joe, but less extraordinary for contracting.

£1K per day is a far from unreasonable amount, if the client is picking up all the travel, for a shorter term gig, even in IT.

That's roughly what I would charge for it. There might be room for negotiation if there was to be longer term work offered after.

[FMCG]

Once you exceed the threshold and if you have a desire to stay in the FRS - need to manage how and when you bill to keep below the threshold (which may mean more holidays) - write to HMRC and they will allow you to stay on the scheme.

[pr1]

Where was there any commentary about me in that? Just an observation, nothing more. The insecurity is all yours

[jamesbrown]

it was more of a tongue in cheek comment than a formal instruction but thanks anyway, I get it, you make a lot of money, well done you

Where was there any commentary about me in that? Just an observation, nothing more. The insecurity is all yours

[pr1]

Not necessarily - 200 days at 1k a day is 240K with standard rate VAT (assuming all work is VATable). Not sure about the rest of you, but 200 days is not exactly hardcore IMO. I understand that 1k may be a fairly high rate in IT, but not everyone here works in IT. Even in IT, I'm sure there's a reasonable number of folks earning at 1k or more - perhaps ~1-5% of them? You're unlikely to exceed the limit by simply working hard. Again, at the risk of talking from a bubble, I understand that 1k is an extraordinary amount for the average Joe, but less extraordinary for contracting.

it was more of a tongue in cheek comment than a formal instruction but thanks anyway, I get it, you make a lot of money, well done you

[jamesbrown]

if you are a one man bos contractor approaching the 230k limit, you need to have more holidays

Not necessarily - 200 days at 1k a day is 240K with standard rate VAT (assuming all work is VATable). Not sure about the rest of you, but 200 days is not exactly hardcore IMO. I understand that 1k may be a fairly high rate in IT, but not everyone here works in IT. Even in IT, I'm sure there's a reasonable number of folks earning at 1k or more - perhaps ~1-5% of them? You're unlikely to exceed the limit by simply working hard. Again, at the risk of talking from a bubble, I understand that 1k is an extraordinary amount for the average Joe, but less extraordinary for contracting.

[BackupBoy]

First year FRS limit

£766/day excl. Nice.

(Assuming no holidays)

[pr1]

if you are a one man bos contractor approaching the 230k limit, you need to have more holidays

[jamesbrown]

Correct. Odd that they include 150k excl VAT and 230 inc VAT.

Curious to know, how many of us are approaching the 230k inc VAT turnover threshold? Presumably if you're hovering around that mark makes sense to stay within FRS and not lose the FRS margin rather than bank the additional turnover..

Yes, the trade-off involves a straightforward calculation for any one year. I suppose it's somewhat more complicated as a strategic decision; you don't want the tail wagging the dog. My turnover varies quite dramatically between years and very few of my supplies are within scope anyway, so I personally can't use it (or wouldn't bother if I could). I would imagine that the vast majority on CUK can and do use it.

[ContractorBanking]

Correct. Odd that they include 150k excl VAT and 230 inc VAT.

Curious to know, how many of us are approaching the 230k inc VAT turnover threshold? Presumably if you're hovering around that mark makes sense to stay within FRS and not lose the FRS margin rather than bank the additional turnover..

[jamesbrown]

Actually upon closer inspection, it looks like it's a), the HMRC text stares:

To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC.

Correct, but bear in mind that the 230k limit to leave the scheme includes VAT.

[ContractorBanking]

Actually upon closer inspection, it looks like it's a), the HMRC text stares:

To join the scheme your VAT turnover must be £150,000 or less (excluding VAT), and you must apply to HMRC.

[ContractorBanking]

A follow up to this - how is the 150k limit calculated, is it?

a) pre-VAT invoice amount
b) or is it VAT inclusive - FRS VAT paid, i.e. same as a) but includes the FRS VAT savings

Couldn't find anything to confirm the calculation on HMRC site.

Thanks

[Andrew@Wisteria]

On FRS, there is a first year limit of £150k pre-VAT turnover.
This extends to £230k VAT-inclusive in subsequent years.

If you extend the first year accounting period, is the £150k threshold prorated?

thanks

If you can argue the next 12 months are less than £191.5k you may be allowed to stay in.