Tax

[Steve Bullman]

3 minutes ago, donnk said:

another reason to see an accountant and go Ltd. Cant be self employed as a director.

Something I learned far too late

[donnk]

just to add, the flat rate vat scheme may be better for some just over the threshold.

 

The rate for forestry is 10.5% instead of 20.

 

so bill a customer £1000  and you add £105 instead of £200. 

 

The flip side is you cant claim input. 

[Inoff the Red]

21 minutes ago, donnk said:

just to add, the flat rate vat scheme may be better for some just over the threshold.

 

The rate for forestry is 10.5% instead of 20.

 

so bill a customer £1000  and you add £105 instead of £200. 

 

The flip side is you cant claim input. 

I think your comment is potentially misleading. For the avoidance of doubt, if you operate a flat rate scheme  the rate of VAT that you must charge on your sales remains 20% so if you invoice a customer £1,000 plus vat, the invoice total is £1,200.

 

The scheme percentage relates to the vat that the trader has to pay over to HMRC. If the example  above was your only sale then you would "only" have to pay vat of £126 to HMRC. (The flat rate percentage is applied to the total value of sales including VAT at 20% and i am assuming that you are correct that 10.5% is the stated rate for your type of work).

 

I must admit that I have not yet come across a business that derives a cash  benefit from operating a flat rate scheme. I have however been contacted by numerous businesses that have received substantial penalties from having misinterpreted the flat rate scheme rules/choosing the wrong flat rate to apply  and found that they get a demand for unpaid vat going back years.

 

For those that use a flat rate scheme don't forget to check the various changes introduced in April 2017 for limited cost businesses. See here https://www.gov.uk/government/publications/vat-notice-733-flat-rate-scheme-for-small-businesses/vat-notice-733-flat-rate-scheme-for-small-businesses

 

Also, ensure that the correct flat rate is being applied because they do change and if your business covers two different sectors, you need to choose the appropriate rate for each sector.

[swinny]

I thought they were dropping the flat rate vat scheme?

 

[Al Cormack]

I was on the flat rate scheme for a few years. They changed the rules last year so if your running costs are only a certain percentage of your turnover then you have to use a 16% rate (I think)
It wasn't worth it to me, so changed back to normal vat scheme.

[Inoff the Red]

18 hours ago, donnk said:

much better deals on wildtracks

 

http://www.pickuptrucksdirect.co.uk/ford-pickup-leasing/ranger/pick-up-double-cab-wildtrak-3-2-tdci-200-auto-7380.html

 

remember 'you' are not buying it the company is. you save the full cost against tax. so its not costing you 250 a month its 250 less corp tax and the double win the company pays it not you out of your post tax income.

 

As for VAT, if your planning to register then start making a big list of ever tool/plant/kit you currently have, find the receipts - you can go back 4 years - and add up all that VAT and you will reclaim it on your first return. Same for the contract hire payments.

 

Unless your company is dormant putting a £40+K transaction through should push you over the VAT registration anyway. And why wouldnt you want to reclaim £8k+ of VAT unless you like funding the welfare state on your own!!

 

 

You really need to have this conversation with an accountant, NOT a bookkeeper. There are other ways to save on tax which they can advise you on.

 

 

Again, potentially misleading. The statement regarding the allowability of the purchase against corporation tax is correct but it does not address the potential benefit in kind cost to a director who has personal use of the asset. If it is a genuine pool vehicle and has no personal use at all then the BiK issue may not arise.

If however, the vehicle is to be used personally then there is a potentially hefty personal tax cost that will arise from the use of a company vehicle.

 

The benefit in kind will be based on the LIST price of the car when NEW (including vat and accessories, regardless of whether it was bought used). The benefit will depend on the vehicle emissions but could be expensive. For example a vehicle with a cost new of £50k and emissions of 171gm will have benefit in kind value of £18,500 creating a tax cost of £3,700 for a 20% tax payer or £7,400 for a 40% tax payer.

There is a further flat rate benefit of £8,658 if the company pays for private fuel.

 

So, you could buy a bargain vehicle second hand and be faced with a combined annual benefit of £27,158 for each year that you own the vehicle and a benefit of this magnitude would almost certainly put you into the 40% tax bracket creating an annual tax cost of £10,863. (and don't forget the company will have to employers national insurance on the benefit also).

 

The days of company cars being a benefit died some years ago.

 

[AHPP]

You’re a fucking useful bloke to have on here.

[benedmonds]

1 hour ago, donnk said:

just to add, the flat rate vat scheme may be better for some just over the threshold.

 

The rate for forestry is 10.5% instead of 20.

 

so bill a customer £1000  and you add £105 instead of £200. 

 

The flip side is you cant claim input. 

Re the VAT rate

You could claim on capital purchases over a certain value when we were in it a few years back..

and as inoff the red says you charge the standard rate but only pay the flat rate.

It worked well for us for a few years..

 

Inoff the black also made some good points re company vehicles.. We had an old land cruiser that was fine when we were a partnership but when we moved to ltd the annual BIK costs were more than the vehicle was worth..  We converted it to a van as I believe commercial vehicles are/or were exempt, it might be that a pickup is classed as commercial or they might have changed that.. 

Edited July 24, 2018 by benedmonds

[donnk]

1 hour ago, Inoff the Red said:

Again, potentially misleading. The statement regarding the allowability of the purchase against corporation tax is correct but it does not address the potential benefit in kind cost to a director who has personal use of the asset. If it is a genuine pool vehicle and has no personal use at all then the BiK issue may not arise.

If however, the vehicle is to be used personally then there is a potentially hefty personal tax cost that will arise from the use of a company vehicle.

 

The benefit in kind will be based on the LIST price of the car when NEW (including vat and accessories, regardless of whether it was bought used). The benefit will depend on the vehicle emissions but could be expensive. For example a vehicle with a cost new of £50k and emissions of 171gm will have benefit in kind value of £18,500 creating a tax cost of £3,700 for a 20% tax payer or £7,400 for a 40% tax payer.

There is a further flat rate benefit of £8,658 if the company pays for private fuel.

 

So, you could buy a bargain vehicle second hand and be faced with a combined annual benefit of £27,158 for each year that you own the vehicle and a benefit of this magnitude would almost certainly put you into the 40% tax bracket creating an annual tax cost of £10,863. (and don't forget the company will have to employers national insurance on the benefit also).

 

The days of company cars being a benefit died some years ago.

 

its not a car so all that is wrong fortunately as BIK on cars is a killer. 

 

for pickups it isnt really a problem.

 

For the 2018/19 tax year, BIK for pickups is fixed at £3,350. So if you pay tax at 20% that’s just £670 a year or £55.83 a month. For a 40% tax payer it works out at £1,340 for the year or £111.67 a month

 

 

[Inoff the Red]

5 minutes ago, donnk said:

its not a car so all that is wrong fortunately as BIK on cars is a killer. 

 

for pickups it isnt really a problem.

 

For the 2018/19 tax year, BIK for pickups is fixed at £3,350. So if you pay tax at 20% that’s just £670 a year or £55.83 a month. For a 40% tax payer it works out at £1,340 for the year or £111.67 a month

 

 

Agreed, although the treatment of pick ups is likely to change following the introduction of some high spec models with all bells and whistles by some manufacturers that HMRC perceive to be designed to circumvent the concession to what was intended to relate to basic work vehicles