What is the "Plus VAT" amount in Contracting rate?

JamesFuller
JamesFuller Posts: 85 Forumite
in Employment, jobseeking & training
Hi all,

I am helping a friend where they are getting contracting offers, where some of the rates are £ + VAT.

For example £400 + VAT per day

What is the VAT amount when it comes to these contracting offers?
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Comments

  • stuartJo1989
    stuartJo1989 Posts: 461 Forumite
    VAT is 20% of the cost (per day).
  • motorguy
    motorguy Posts: 22,473 Forumite
    Name Dropper First Anniversary First Post
    JamesFuller wrote: »
    Hi all,

    I am helping a friend where they are getting contracting offers, where some of the rates are £ + VAT.

    For example £400 + VAT per day

    What is the VAT amount when it comes to these contracting offers?

    If hes VAT registered, he will get £400+VAT a day, if hes not VAT registered, he'll charge £400 a day.

    If hes VAT registered he'll have to pay the +VAT element to HMRC anyway.
  • gettingtheresometime
    gettingtheresometime Posts: 6,911 Forumite
    First Anniversary Name Dropper First Post I've been Money Tipped!
    Has your friend gone to see an accountant?
  • isplumm
    isplumm Posts: 2,204 Forumite
    Photogenic Name Dropper First Anniversary First Post
    JamesFuller wrote: »
    Hi all,

    I am helping a friend where they are getting contracting offers, where some of the rates are £ + VAT.

    For example £400 + VAT per day

    What is the VAT amount when it comes to these contracting offers?

    Hi

    Remember that if your friend is going down the contractor route, most clients will expect him to have his own LTD company.

    Thanks Mark
    We’ve had to remove your signature. Please check the Forum Rules if you’re unsure why it’s been removed and, if still unsure, email forumteam@moneysavingexpert.com
  • JamesFuller
    JamesFuller Posts: 85 Forumite
    Hi all,

    He is going to be VAT registered.

    He is going to set-up a LTD company through which he will work.

    How can he claim the VAT on his £400 a day rate? Does he do this through his accountants?
  • sangie595
    sangie595 Posts: 6,092 Forumite
    Is your friend incapable of signing up for an account and posting their own questions? For which the best answer is still that they should get proper professional advice. But if they need this much help from a forum through a third party, then they simply aren't fit to be a contractor yet.
  • motorguy
    motorguy Posts: 22,473 Forumite
    Name Dropper First Anniversary First Post
    JamesFuller wrote: »
    Hi all,

    He is going to be VAT registered.

    He is going to set-up a LTD company through which he will work.

    How can he claim the VAT on his £400 a day rate? Does he do this through his accountants?

    He cant "claim the vat" on his day rate, he'll have to charge it, then pass it on to HMRC every three months.

    As has been said, if he joins the VAT margin scheme, theres a smallish financial gain to be made each year.

    He really needs to be talking to his accountant about these things though.

    Have him have a look at https://forums.contractoruk.com/

    Theres lots of info on there.
  • paddyrg
    paddyrg Posts: 13,543 Forumite
    I'm afraid I'm rather with sangie here - setting up a limited company and registering for VAT aren't difficult but do come with real responsibilities which require them to pay proper attention. These questions suggest they need real professional advice direct from an accountant they pay for it from (free advice is worth every penny you pay for it).
  • motorguy
    motorguy Posts: 22,473 Forumite
    Name Dropper First Anniversary First Post
    paddyrg wrote: »
    I'm afraid I'm rather with sangie here - setting up a limited company and registering for VAT aren't difficult but do come with real responsibilities which require them to pay proper attention. These questions suggest they need real professional advice direct from an accountant they pay for it from (free advice is worth every penny you pay for it).

    I dont think anyone is saying otherwise, however it does no harm to have a view of the mechanics of it before approaching an accountant, which i would assume the O/Ps friend is going to do.

    Lots of info on the uk contractor forum as per the link above.
  • Derwent
    Derwent Posts: 571 Forumite
    First Anniversary Combo Breaker
    motorguy wrote: »

    If hes VAT registered he'll have to pay the +VAT element to HMRC anyway.

    Not necessarily. He can register for the flat rate scheme and keep a portion of it. The rate varies depending on the type of work but can be as high as 16% - ie if you billed a customer for £1000 plus vat and were on the flat rate scheme at 12% then you’d pay HMRC £120 and keep £80 of the vat.


    https://www.gov.uk/vat-flat-rate-scheme/how-much-you-pay
    Its amazing how these banks can't even do simple calculations correctly..............
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