Vat On Expenses When Not Vat Registered

NICHOLAS_2

I think i am going insane here, my initial thoughts were that if i bought something that was solely for business use, i could only claim the cost of it without the VAT figure.

But i think i have been wrong, hopefully, if i spent, for example, £100 on advertising which was £120 with the VAT i claim the £120, the only difference is that i can't claim the £20 back as cash?

Am i right?

zygurat789

NICHOLAS wrote: »

I think i am going insane here, my initial thoughts were that if i bought something that was solely for business use, i could only claim the cost of it without the VAT figure.

But i think i have been wrong, hopefully, if i spent, for example, £100 on advertising which was £120 with the VAT i claim the £120, the only difference is that i can't claim the £20 back as cash?

Am i right?

If you are not vat registered then you have paid £120 for advertising and that is the cost you may reclaim against your income for income tax purposes.
If you are vat registered then you may claim £20 back as vat input tax and the cost is only £100 that you may claim for income tax purposes.
If you are not vat registered don't even think about this sort of idea.

NICHOLAS_2

Hi, thanks for that. I wasn't thinking about doing anything dodgy, i was just trying to work out whether i deduct expense including vat or minus.

I am quite a happy person right now, my tax bill is going to be nowhere near a big as i thought it was going to be.

When i was doing rough maths a few months ago i was minusing VAT from my expenses

pelirocco

NICHOLAS wrote: »

Hi, thanks for that. I wasn't thinking about doing anything dodgy, i was just trying to work out whether i deduct expense including vat or minus.

I am quite a happy person right now, my tax bill is going to be nowhere near a big as i thought it was going to be.

When i was doing rough maths a few months ago i was minusing VAT from my expenses

The downside of not paying much tax is you won't be making much profit !

Not being vat registered will impact on your profitability if you are making a lot of vat added purchases , how much vat are you losing a month

zygurat789

NICHOLAS wrote: »

Hi, thanks for that. I wasn't thinking about doing anything dodgy, i was just trying to work out whether i deduct expense including vat or minus.

I am quite a happy person right now, my tax bill is going to be nowhere near a big as i thought it was going to be.

When i was doing rough maths a few months ago i was minusing VAT from my expenses

If you ever think about becoming VAT registered then it is bad news if you sell to the general public or other non-vat registered people.

NICHOLAS_2

pelirocco wrote: »

The downside of not paying much tax is you won't be making much profit !

Not quite

Not being vat registered will impact on your profitability if you are making a lot of vat added purchases , how much vat are you losing a month

It's more the impact on customers that is the problem for self employed people and VAT.

It's ok if you're business to business, b2c is a lot harder when there are so many people going around in my industry that don;t pay any tax never mind charging vat. You can probably guess the business sector.

NICHOLAS_2

zygurat789 wrote: »

If you ever think about becoming VAT registered then it is bad news if you sell to the general public or other non-vat registered people.

Yes it is, unless you are prepared to sink more hours and money into it to try and grow the business into something more substantial.

I want to eventually cut myself out of the loop altogether by working on my own projects so i wont have any customers anyway, growing a business has never appealed to me.