Paying yourself - how much?

[Peasgood]

1 hour ago, Mark Bolam said:

 

Skip the first few volumes. Volume 14 is where it starts to be a bit more enlightening.

[kevinjohnsonmbe]

9 hours ago, Dbikeguy said:

I’m just over a year into my own setup,45% tree work 55% timber based landscaping
I always keep a good few k in the bank for materials on the build side, have invested most of the profit back into tools and stock (fasteners, brackets, sealants etc) to enable faster working and less downtime hiring stuff part way through a job.
plus obv a pickup and trailer.

I’ve covered my personal bills and the odd toy but not taken a proper wage yet.
Post April i am going to move to running more like a ltd company and pay myself a set wage and then dividends, with the knowledge i will need to go vat registered and limited by the middle of the year.
Will also be buying a new truck so going vat registered will mean a lovely rebate hopefully!
Then the old chestnut of do i make 2 companies,keep the tree side vat free and have the build side vat registered etc.

For tree only i would work out your running costs, setting a day rate for yourself, with profit on top.
Day rate is your wage each month, profit sits in the company for new kit or a bonus for yourself come the end of the year, but leaving enough to cover breakdowns, theft (could you keep running if you got broken into ie could you go buy 2 saws, basic climbing kit and hire a chipper?)

Have you sought professional advice about 2 companies with only 1 as VAT registered?

 

Im not saying it’s not ‘possible’ but there does need to be a tangible degree of separation between the 2 in both the nature of the business and the ability to use the same ‘tools’ (including vehicles, plant etc) for both companies. 
 

If you had ostensibly the same business operating as both non VAT registered and VAT registered you should probably expect to be bent over by HMRC. 
 

Tread carefully.... Plenty of online info about this scenario. 

[Dbikeguy]

Have you sought professional advice about 2 companies with only 1 as VAT registered?
 
Im not saying it’s not ‘possible’ but there does need to be a tangible degree of separation between the 2 in both the nature of the business and the ability to use the same ‘tools’ (including vehicles, plant etc) for both companies. 
 
If you had ostensibly the same business operating as both non VAT registered and VAT registered you should probably expect to be bent over by HMRC. 
 
Tread carefully.... Plenty of online info about this scenario. 

Been advised it’s fine, only crossover would be the Hilux as tree kit doesn’t get used in the other stuff we do, bar maybe a chainsaw very occasionally.
would mean i can’t claim the vat back on the truck though...
Staff wouldn’t cross over just me.

[kevinjohnsonmbe]

2 hours ago, Dbikeguy said:

 

Been advised it’s fine, only crossover would be the Hilux as tree kit doesn’t get used in the other stuff we do, bar maybe a chainsaw very occasionally.
would mean i can’t claim the vat back on the truck though...
Staff wouldn’t cross over just me.

 

OK, hope that works out for you and it doesn’t fall foul of the business disaggregation definition which arises where artificial structures are created to avoid tax.

 

Its just that you did say:

 

“...Will also be buying a new truck so going vat registered will mean a lovely rebate hopefully...” 

 

If you run 2 companies and only 1 is VAT reg, any crossover between the 2 would likely attract particular attention from Hector. 
 

Simply having the same named officers / premises would likely be enough to flag an interest. Simple data set cross-match regardless of timeliness, content and accuracy of filing. 
 

Just saying mate, be careful. If you’ve been advised that it is OK, ask your advisor if their PI covers your cost of investigation and ask them to provide written copy of advice. 
 

 

[donnk]

if you use the truck or any tools which you reclaimed vat on for your 'non vat' business you will be in a world oh sh1t when HMRC come calling. 

 

Worst cast they add 20% vat to all your sales since VAT reg from the non-vat and make you pay it.

[doobin]

Artificial separation of companies is very rarely successful.