Tax question?

[Clark]

Not sure exactly how this works, for example, if I were to pay someone for a day's work for example £120, and they invoice me. The total job is £600. Do I pay tax on the whole £600 or claim back the £120 and pay tax on £480?

 

Thanks guys

[ballibeg]

Which taxes are you talking about?

 

VAT, if you're registered, is charged on the £600 to the customer and then passed on by you to HMRC after you make your return.

 

Are you a sole trade/partnership/Ltd company etc? It all varies slightly. You really need an accountant to get you on the right track.

[Clark]

Yeah I'm not VAT registered, just a sole trader.

 

Thank you

[john p]

£600 is the gross of the job, you pay matey his 120, any other costs for the job take off and your left with profit, that's what you pay tax on

[Hats]

Correct john p

[Clark]

I thought so, just wanted to make sure cheers

[Mortimer Firewood]

Go see an accountant it will save you tut in the long run

[Billy68]

As above saves the grey hair

[woodchief]

Certainly make sure you don't pay tax on the gross. That would be an expensive mistake.

[woodchief]

John is right. You only ever pay tax on the profit.