vat threshold

billozz

hi all i ama window cleaner, i have deliberately tried to keep my work under the threshold for vat but i have got to the pint where i need to increase my prices, when i do this, if ALL my customers accept the increase it will put me over the threshold, but if i lose many that could keep me under the threshold im ot sure what to do. can antone advise please.
thanks
Bill

00ec25

what advice do you want, the threshold is the threshold, either you breach it or you don't

either your customer base is businesses who won't care about a VAT increase, or consumers who will, or a mix of the 2 that only you can know the balance of and therefore how many you may lose due to higher price.

why do you "have" to put your prices up. If your turnover is close to 85k how much is your margin that you apparently cannot live on the profits made from a 75 - 80k turnover cleaning windows?

billozz

thanks for the reply
well from what ive been told i have to try and predict if im going to go over the threshold and put money to one side to pay the vat.
its impossible to predict how many customers will react badly to a 20% increase.

00ec25

billozz wrote: »

thanks for the reply
well from what ive been told i have to try and predict if im going to go over the threshold and put money to one side to pay the vat.
its impossible to predict how many customers will react badly to a 20% increase.

I suspect you have misunderstood.
https://www.gov.uk/vat-registration/calculate-turnover

1. looking backwards over the previous 12 months you must register if your taxable turnover goes to 85k or above. You must register within 30 days of noting that position. The 12 months is a constantly rolling period, it is not simply your fixed year end dates or the April/April tax year. That said you need your records/ledger/management accounts to be up to date to be able to monitor that. Obviously if you get it wrong and at a later date submit your annual accounts showing a turnover above that you do risk being fined for late registration and would still have to pay the VAT owed retrospectively.

OR

2. You must register if you expect your turnover in a single 30 day period (as at now or looking forwards a few days) to be at least 85k for that single period (impossible in your case as I doubt you'd suddenly sell £0,000 extra in a month)

if your accounts are not good enough to monitor this, speak to your accountant

billozz wrote: »

its impossible to predict how many customers will react badly to a 20% increase.

so you sell mainly to consumers then? As I said, the threshold is the threshold, there is no "prediction" about it, either your 12 months exceeds it or it doesn't.

If your sales drop as a result and you remain below the de-registration threshold (£83k) you can simply de-register.
https://www.gov.uk/vat-registration/cancel-registration

PasturesNew

You don't have to charge your customers more, or all of the increase...

Current charge £10.
Now need to add VAT = £10 + £2.

You could just charge your customers £10 inc VAT (£8.33+ VAT) .... and after that just charge new customers £12 inc VAT and slowly raise prices of existing customers over the next two years. That way at least you'll not be losing customers, just income.

molerat

£370 a day cleaning windows ! (46 weeks x 5 days)

badmemory

molerat wrote: »

£370 a day cleaning windows ! (46 weeks x 5 days)

Judging by what my window cleaner charges - easy peasy - but he always has one 'lad' working for him. Gone are the days when they drove around (well move their ladders around) in 15 year old vans, mine has a very nice, brand new, labelled up van.

billozz

£370 a day cleaning windows ! (46 weeks x 5 days)

sorry id ont understand this comment

00ec25

billozz wrote: »

£370 a day cleaning windows ! (46 weeks x 5 days)

sorry id ont understand this comment

do the maths 370 x 5 x 46 = 85,100, so above the threshold and therefore you must be earning at least £370 per day - are you?

billozz

do the maths 370 x 5 x 46 = 85,100, so above the threshold and therefore you must be earning at least £370 per day - are you?


no i am not there yet