Vat On Expenses When Not Vat Registered

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?

Comments

  • zygurat789
    zygurat789 Posts: 4,263 Forumite
    Part of the Furniture Combo Breaker
    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.
    The only thing that is constant is change.
  • NICHOLAS_2
    NICHOLAS_2 Posts: 613 Forumite
    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 :D
  • pelirocco
    pelirocco Posts: 8,275 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    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 :D


    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
    Vuja De - the feeling you'll be here later
  • zygurat789
    zygurat789 Posts: 4,263 Forumite
    Part of the Furniture Combo Breaker
    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 :D

    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.
    The only thing that is constant is change.
  • NICHOLAS_2
    NICHOLAS_2 Posts: 613 Forumite
    pelirocco wrote: »
    The downside of not paying much tax is you won't be making much profit !

    Not quite :D
    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
    NICHOLAS_2 Posts: 613 Forumite
    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.
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