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| | | Author: | XKLSVBRKS  | | Posted: | Feb 18, 2024 11:43 | | Subject: | UK VAT threshold | | Viewed: | 108 times | | Topic: | Taxes | |
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| Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
Thank you in advance!
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| | | | | Author: | 1001bricks | | Posted: | Feb 18, 2024 13:21 | | Subject: | Re: UK VAT threshold | | Viewed: | 50 times | | Topic: | Taxes | |
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| In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
|
I don't know for UK, but in a more general meaning:
* Being "Pro" is more related to your IRS / Laws than a personal choice
* Pro and VAT will probably cost you MORE in time and energy (accounting...)
but will allow you to have higher limits (to no limits), and a few more customers
who'll favorite professionals to amateurs.
In the end YOU have to read your Laws and understand / calculate everything.
DO NOT listen to any advice on the Net: it's your decision, you'll be
the manager, your responsability, profits but eventual risks (not the ones who
recommend)
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| | | | | | | Author: | XKLSVBRKS | | Posted: | Feb 18, 2024 16:13 | | Subject: | Re: UK VAT threshold | | Viewed: | 40 times | | Topic: | Taxes | |
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| In Taxes, 1001bricks writes:
| | In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
|
I don't know for UK, but in a more general meaning:
* Being "Pro" is more related to your IRS / Laws than a personal choice
* Pro and VAT will probably cost you MORE in time and energy (accounting...)
but will allow you to have higher limits (to no limits), and a few more customers
who'll favorite professionals to amateurs.
In the end YOU have to read your Laws and understand / calculate everything.
DO NOT listen to any advice on the Net: it's your decision, you'll be
the manager, your responsability, profits but eventual risks (not the ones who
recommend)
|
Well, I've read many stories that due to crossing this threshold in the UK,
many small businesses have started struggling a lot, in some cases even to a
point of having to close down their business as it's just become too difficult
for them to deal with.
It's obviously necessary if you want to expand your business as far as possible,
but some people are okay with being just below that threshold, therefore I'd
like to hear from some bricklink sellers that are either just below it, or have
gone vat registered, to see what's worked better for them.
I want to hear if people find it worth spending this extra time, money and energy
for being vat registered rather than staying below the threshold, I'm not
exactly looking for an advice but a story of personal experience or an opinion
rather.
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| | | | | | | | | Author: | 1001bricks | | Posted: | Feb 18, 2024 16:41 | | Subject: | Re: UK VAT threshold | | Viewed: | 38 times | | Topic: | Taxes | |
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| In Taxes, XKLSVBRKS writes:
| | In Taxes, 1001bricks writes:
| | DO NOT listen to any advice on the Net: it's your decision, you'll be
the manager, your responsability, profits but eventual risks (not the ones who
recommend)
|
Well, I've read many stories that due to crossing this threshold in the UK,
many small businesses have started struggling a lot, in some cases even to a
point of having to close down their business as it's just become too difficult
for them to deal with.
|
Yes, Pro/VAT is much more complex.
| | It's obviously necessary if you want to expand your business as far as possible,
but some people are okay with being just below that threshold
|
What I said, sorry.
You HAVE to make this calculation, on what you'd gain, what you'll expect,
what it'll cost you (money, time, energy).
Otherwise, some will tell you "It's not worth" (in their case?) or
"Yeah it's super!" (because they're making $200,000 per year?).
Again, that won't help you in any way.
You are the boss of your Life, read Laws, VAT, calculate, nobody will tell if
it's better or not in YOUR situation (they don't know about).
Really, I'm trying to help you here.
It was me, I'd say "Go for Pro/VAT, it's worth it!" (for us,
but for your I'm not sure and can't tell.)
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| | | | | | | | | | | Author: | XKLSVBRKS | | Posted: | Feb 18, 2024 17:22 | | Subject: | Re: UK VAT threshold | | Viewed: | 27 times | | Topic: | Taxes | |
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| In Taxes, 1001bricks writes:
| | In Taxes, XKLSVBRKS writes:
| | In Taxes, 1001bricks writes:
| | DO NOT listen to any advice on the Net: it's your decision, you'll be
the manager, your responsability, profits but eventual risks (not the ones who
recommend)
|
Well, I've read many stories that due to crossing this threshold in the UK,
many small businesses have started struggling a lot, in some cases even to a
point of having to close down their business as it's just become too difficult
for them to deal with.
|
Yes, Pro/VAT is much more complex.
| | It's obviously necessary if you want to expand your business as far as possible,
but some people are okay with being just below that threshold
|
What I said, sorry.
You HAVE to make this calculation, on what you'd gain, what you'll expect,
what it'll cost you (money, time, energy).
Otherwise, some will tell you "It's not worth" (in their case?) or
"Yeah it's super!" (because they're making $200,000 per year?).
Again, that won't help you in any way.
You are the boss of your Life, read Laws, VAT, calculate, nobody will tell if
it's better or not in YOUR situation (they don't know about).
Really, I'm trying to help you here.
It was me, I'd say "Go for Pro/VAT, it's worth it!" (for us,
but for your I'm not sure and can't tell.)
|
I get what you're saying, but I can also see that your store is way bigger
than mine, so due to numbers, obviously it must be worth for you. I am not planning
to grow my store anywhere near those numbers, at least not in a near future,
so if I'd register for vat and only go past the threshold by a few thousand,
it would give me a lot of new headache for very little gain, at least that's
what I understand from reading many stories of people going through in the UK.
I appreciate your opinions/advice, but I'd still like to see how UK sellers
look at it, before deciding if I should look for help from a professional bookkeeper/accountant,
because at the moment I can still manage it all myself. Not so sure if I still
could after registering for vat.
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| | | | | Author: | hedgehog_bricks | | Posted: | Feb 19, 2024 03:18 | | Subject: | Re: UK VAT threshold | | Viewed: | 53 times | | Topic: | Taxes | |
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| In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
Thank you in advance!
|
To answer your first question, it would depend on several things. For me, it
would mean that I could use Royal Mail's Tracked 24/48 services for less
than conventional mail and that packaging would cost "less" as the ex.
VAT price is lower. But that only save a few tens or hundreds of pounds a year.
Accessing wholesalers may also be easier as they typically want to see proof
of VAT registration.
The other benefit of registering before you reach the threshold is that you can
control how and when you do that. If you go over the £85,000 threshold or expect
to within the next 30 days you have to register within 30 days and then you have
to start doing VAT returns in line with your accounting period (e.g. every 3
months). Note that the threshold of £85,000 applies to any rolling 12-month period
and not just to your financial or tax year (April-April).
The overhead of VAT is what can make things complicated. It adds an administration
and record-keeping burden that can be hard to manage if not planned for and done
properly.
If you are unsure, your best bet is to talk to a local accountant. Make sure
that they have experience of dealing with businesses that do selling via online
marketplaces, particularly if you are selling internationally.
Importantly, I am not an accountant, so do your own research, etc. 
Jonathan
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| | | | | | | Author: | XKLSVBRKS | | Posted: | Feb 19, 2024 11:57 | | Subject: | Re: UK VAT threshold | | Viewed: | 34 times | | Topic: | Taxes | |
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| In Taxes, hedgehog_bricks writes:
| | In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
Thank you in advance!
|
To answer your first question, it would depend on several things. For me, it
would mean that I could use Royal Mail's Tracked 24/48 services for less
than conventional mail and that packaging would cost "less" as the ex.
VAT price is lower. But that only save a few tens or hundreds of pounds a year.
Accessing wholesalers may also be easier as they typically want to see proof
of VAT registration.
The other benefit of registering before you reach the threshold is that you can
control how and when you do that. If you go over the £85,000 threshold or expect
to within the next 30 days you have to register within 30 days and then you have
to start doing VAT returns in line with your accounting period (e.g. every 3
months). Note that the threshold of £85,000 applies to any rolling 12-month period
and not just to your financial or tax year (April-April).
The overhead of VAT is what can make things complicated. It adds an administration
and record-keeping burden that can be hard to manage if not planned for and done
properly.
If you are unsure, your best bet is to talk to a local accountant. Make sure
that they have experience of dealing with businesses that do selling via online
marketplaces, particularly if you are selling internationally.
Importantly, I am not an accountant, so do your own research, etc.
Jonathan
|
First of all, thank you for your input, I really appreciate it.
Second, about the VAT period, does the count start with the first sale? If I
had my first order on first of July, for example, does the year refresh on 30th
of June the following year? And if one gets registered, do you remain VAT registered
for good, or as the year refreshes, you start fresh till you reach the threshold
again?
And yeah, I'm mostly worried about all the extra paperwork and all the extra
bookkeeping stuff. I am not quite sure if I would yet be prepared, physically
and mentally, to pull it off myself, and if hiring someone to do it for me would
pay off.. I was thinking that maybe the smartest thing to do would be taking
it slow for a while till I become more confident about it all.
I've been doing some research all over the place, but as I don't have
much experience with this type of stuff, it gets overwhelming quite quick, especially
after reading some of the horror stories that some people have experienced after
registering for VAT..
No research beats it quite as much as hearing some of it from fellow bricklinkers.
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| | | | | | | | | Author: | hedgehog_bricks | | Posted: | Feb 19, 2024 17:14 | | Subject: | Re: UK VAT threshold | | Viewed: | 33 times | | Topic: | Taxes | |
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| In Taxes, XKLSVBRKS writes:
| | Second, about the VAT period, does the count start with the first sale? If I
had my first order on first of July, for example, does the year refresh on 30th
of June the following year? And if one gets registered, do you remain VAT registered
for good, or as the year refreshes, you start fresh till you reach the threshold
again?
|
It's always a rolling year, so the count doesn't reset. Today it would
be your revenue from 20 Feb 2023. Tomorrow it would be from 21 Feb 2023.
The deregistration threshold is £83,000, so if you think you will never exceed
£83,000 again (e.g. if you were winding up the business) then you can request
to deregister. But hopefully you would still be looking at increasing your revenue
further!
Success with the extra admin work depends on how organised you are. Any reasonable
accounting software would simplify this for you, meaning that all you need to
do is record your purchases and sales and pay your VAT to HMRC at the end of
your accounting period. If you are organised then it won't be too much hassle.
I note that you didn't say how you are trading. For VAT it doesn't matter
if you're a sole trader or a limited company - the rules are the same.
Jonathan
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| | | | | | | | | | | Author: | XKLSVBRKS | | Posted: | Feb 19, 2024 20:37 | | Subject: | Re: UK VAT threshold | | Viewed: | 43 times | | Topic: | Taxes | |
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| In Taxes, hedgehog_bricks writes:
| | In Taxes, XKLSVBRKS writes:
| | Second, about the VAT period, does the count start with the first sale? If I
had my first order on first of July, for example, does the year refresh on 30th
of June the following year? And if one gets registered, do you remain VAT registered
for good, or as the year refreshes, you start fresh till you reach the threshold
again?
|
It's always a rolling year, so the count doesn't reset. Today it would
be your revenue from 20 Feb 2023. Tomorrow it would be from 21 Feb 2023.
The deregistration threshold is £83,000, so if you think you will never exceed
£83,000 again (e.g. if you were winding up the business) then you can request
to deregister. But hopefully you would still be looking at increasing your revenue
further!
Success with the extra admin work depends on how organised you are. Any reasonable
accounting software would simplify this for you, meaning that all you need to
do is record your purchases and sales and pay your VAT to HMRC at the end of
your accounting period. If you are organised then it won't be too much hassle.
I note that you didn't say how you are trading. For VAT it doesn't matter
if you're a sole trader or a limited company - the rules are the same.
Jonathan
|
Oh wow, okay, that's one thing I somehow wasn't able to pick up by researching
this elsewhere. Basically, in order to remain below the threshold (if I don't
feel ready to deal with VAT yet) I would always have to make sure that I don't
surpass it within the next 30 days (by always knowing the numbers of the past
11 months)?
All in all, it would probably be the best to initially get a professional advice
from an experienced accountant that specializes in similar businesses, find the
most appropriate software and learn all the processes for record keeping and
all the VAT related stuff before making the big step, am I +/- correct?
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| | | | | | | | | | | | | Author: | hedgehog_bricks | | Posted: | Feb 20, 2024 05:37 | | Subject: | Re: UK VAT threshold | | Viewed: | 30 times | | Topic: | Taxes | |
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| In Taxes, XKLSVBRKS writes:
| | Oh wow, okay, that's one thing I somehow wasn't able to pick up by researching
this elsewhere. Basically, in order to remain below the threshold (if I don't
feel ready to deal with VAT yet) I would always have to make sure that I don't
surpass it within the next 30 days (by always knowing the numbers of the past
11 months)?
|
This is my understanding, yes.
| | All in all, it would probably be the best to initially get a professional advice
from an experienced accountant that specializes in similar businesses, find the
most appropriate software and learn all the processes for record keeping and
all the VAT related stuff before making the big step, am I +/- correct?
|
Yes, getting professional advice is wise. It's an interesting world, but
with some pitfalls, so they will help you avoid that.
While not a substitute for professional advice, I also recommend the book "Bookkeeping
and Accounting all-in-one for Dummies". It breaks things down quite nicely
and will help you get on your feet. There is a chapter on VAT.
Jonathan
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| | | | | Author: | infinibrix | | Posted: | Feb 19, 2024 06:55 | | Subject: | Re: UK VAT threshold | | Viewed: | 55 times | | Topic: | Taxes | |
|
| In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
Thank you in advance!
|
A few things to think about before considering the VAT registered route would
be whether you can increase your all important net profit whilst still remaining
below the VAT threshold? For instance the only thing that will get you close
to the VAT threshold is high turnover but high turnover doesn't necessarily
equate to being the most profitable business therefore it might first be better
to fine turn the stock you sell. For instance high value ticket items like sets
can increase your turnover quite quickly to an impressive level without generating
all that much profit that is unless you hold onto them for a few years or part
them out!
Either way even the parts and minfigs we choose to sell/invest in can be fine
tuned in the sense that selling an item for 22p that was bought for 2p is better
than selling an item for 52p that was bought for 30p. Exactly the same profit
but one has a significantly bigger impact on your overall turnover and when you
scale this up across everything you sell it can make a big difference!
Obviously the other thing that will increase your turnover is the shipping costs
you charge and shipping a lot of international mail will increase your turnover
without seeing any improvement to your overall net profit therefore it may also
be worth only focusing on UK sales whilst operating below the VAT threshold.
The other benefit of disabling international sales for this purpose is that it
will give you a better incline of what potential business is waiting for you
at the click of a button helping you to better guage whether you can generate
enough sales to make the switch worthwhile.
But in the end if you feel that trying to remain below the VAT threshold is holding
you back then it may well be worth making the switch.
However if your currently running your store alone then keep in mind that much
more detailed itemization of your accounting will be required and therefore this
will likely take up a lot more of your own free time or take away money from
your business seeking out further assistance or employing someone to deal with
not only this but also the increased workload that comes with operating a bigger
store!
|
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| | | | | | | Author: | XKLSVBRKS | | Posted: | Feb 19, 2024 12:07 | | Subject: | Re: UK VAT threshold | | Viewed: | 37 times | | Topic: | Taxes | |
|
| In Taxes, infinibrix writes:
| | In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
Thank you in advance!
|
A few things to think about before considering the VAT registered route would
be whether you can increase your all important net profit whilst still remaining
below the VAT threshold? For instance the only thing that will get you close
to the VAT threshold is high turnover but high turnover doesn't necessarily
equate to being the most profitable business therefore it might first be better
to fine turn the stock you sell. For instance high value ticket items like sets
can increase your turnover quite quickly to an impressive level without generating
all that much profit that is unless you hold onto them for a few years or part
them out!
Either way even the parts and minfigs we choose to sell/invest in can be fine
tuned in the sense that selling an item for 22p that was bought for 2p is better
than selling an item for 52p that was bought for 30p. Exactly the same profit
but one has a significantly bigger impact on your overall turnover and when you
scale this up across everything you sell it can make a big difference!
Obviously the other thing that will increase your turnover is the shipping costs
you charge and shipping a lot of international mail will increase your turnover
without seeing any improvement to your overall net profit therefore it may also
be worth only focusing on UK sales whilst operating below the VAT threshold.
The other benefit of disabling international sales for this purpose is that it
will give you a better incline of what potential business is waiting for you
at the click of a button helping you to better guage whether you can generate
enough sales to make the switch worthwhile.
But in the end if you feel that trying to remain below the VAT threshold is holding
you back then it may well be worth making the switch.
However if your currently running your store alone then keep in mind that much
more detailed itemization of your accounting will be required and therefore this
will likely take up a lot more of your own free time or take away money from
your business seeking out further assistance or employing someone to deal with
not only this but also the increased workload that comes with operating a bigger
store!
|
Thank you very much for your input, it's much appreciated!
I can tell you straight away, that this made me think about some things that
I never even though of thinking about, especially how international shipping
costs increase the turnover that much, so that's very helpful.
Just one follow up, does being VAT registered really adds so much paperwork and
accounting tasks? Whenever I read through the gov website pages or elsewhere,
it's all made look quite straight forward. It probably is, but to those that
have good experience dealing with it while a beginner would get confused/potentially
burn out quite quick if there'd be many transactions involved..?
|
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| | | | | | | | | Author: | infinibrix | | Posted: | Feb 20, 2024 09:08 | | Subject: | Re: UK VAT threshold | | Viewed: | 45 times | | Topic: | Taxes | |
|
| In Taxes, XKLSVBRKS writes:
| | In Taxes, infinibrix writes:
| | In Taxes, XKLSVBRKS writes:
| | Hi all. A couple of questions for UK based bricklink sellers that know a thing
or two about being VAT registered.
First of all, is it worth being VAT registered when selling on bricklink if the
store turnover is under the threshold?
And if not, is it worth going past the threshold where it's mandatory to
become VAT refistered if the store would only go past the threshold by a few
thousand pounds, or it's better to remain below the threshold and just stop
selling till the end of VAT year and resume selling when a new year begins?
I've been struggling to understand this stuff from info I find on gov pages
or other sources, would really like to hear about it from some of the fellow
sellers.
Thank you in advance!
|
A few things to think about before considering the VAT registered route would
be whether you can increase your all important net profit whilst still remaining
below the VAT threshold? For instance the only thing that will get you close
to the VAT threshold is high turnover but high turnover doesn't necessarily
equate to being the most profitable business therefore it might first be better
to fine turn the stock you sell. For instance high value ticket items like sets
can increase your turnover quite quickly to an impressive level without generating
all that much profit that is unless you hold onto them for a few years or part
them out!
Either way even the parts and minfigs we choose to sell/invest in can be fine
tuned in the sense that selling an item for 22p that was bought for 2p is better
than selling an item for 52p that was bought for 30p. Exactly the same profit
but one has a significantly bigger impact on your overall turnover and when you
scale this up across everything you sell it can make a big difference!
Obviously the other thing that will increase your turnover is the shipping costs
you charge and shipping a lot of international mail will increase your turnover
without seeing any improvement to your overall net profit therefore it may also
be worth only focusing on UK sales whilst operating below the VAT threshold.
The other benefit of disabling international sales for this purpose is that it
will give you a better incline of what potential business is waiting for you
at the click of a button helping you to better guage whether you can generate
enough sales to make the switch worthwhile.
But in the end if you feel that trying to remain below the VAT threshold is holding
you back then it may well be worth making the switch.
However if your currently running your store alone then keep in mind that much
more detailed itemization of your accounting will be required and therefore this
will likely take up a lot more of your own free time or take away money from
your business seeking out further assistance or employing someone to deal with
not only this but also the increased workload that comes with operating a bigger
store!
|
Thank you very much for your input, it's much appreciated!
I can tell you straight away, that this made me think about some things that
I never even though of thinking about, especially how international shipping
costs increase the turnover that much, so that's very helpful.
Just one follow up, does being VAT registered really adds so much paperwork and
accounting tasks? Whenever I read through the gov website pages or elsewhere,
it's all made look quite straight forward. It probably is, but to those that
have good experience dealing with it while a beginner would get confused/potentially
burn out quite quick if there'd be many transactions involved..?
|
You'll have to look into that in some more detail but for me I've only
come close to the VAT threshold once during the pandemic where I had to close
the store for a few weeks but at that time I would say I was as busy as I would
ever want to be therefore for me the increased turnover would likely either mean
no life or needing to employ someone neither of which I would want
I also feel there is a lot of tweaking I can still do before I consider the VAT
threshold a barrier that I need to move beyond such as moving more of my business
away from ebay as they take a bigger fee share meaning I have to increase my
prices over there to compensate which in turn increases my overall turnover without
necessarily increasing profit! I would also look to scale down the number of
orders I process by increasing minimum spends and prices. For instance I currently
have a lot of sub £5 items listed on ebay where you do so in the hope people
will purchase multiple items since you are unable to set minimum store spends
over there and you have to consider that ebay/paypal take 30p per transaction
on top of the usual percentage fees.
So removing small listings and bundling lots over there, moving more business
over here, removing international transactions and then increasing prices and/or
being more selective over what I sell I hope will increase profits and reduce
workload without feeling the need to be Vat Registered or at least that's
the long term plan for me if and when I keep getting too close to the VAT threshold
but at the moment I'm not yet in that position where I can be overly selective
over the types of orders I process compared to when it went crazy for me during
the pandemic
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| | | | | | | | | | | Author: | enig | | Posted: | Feb 20, 2024 11:06 | | Subject: | Re: UK VAT threshold | | Viewed: | 42 times | | Topic: | Taxes | |
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| infinibrix gave you some good advice already, but something that no one has mentioned
so far is - the way you are acquiring your items for (re)sale might be quite
important for you.
If you become a VAT payer - gone are the days when you can buy a random used
(or even new) set on your local marketplace and re-sell it. Well, technically
you can still do it, but you will need to part with the VAT portion of the sale
price.
If you are already acquiring most of your inventory from VAT-registered sellers
then this is a non-factor. And you still can buy from private individuals,
but if you will want to put that kind of purchases on your expense sheet then
you might need a different form of 'proof of money going out'. What exact
kind of document you will need depends on UK TAX Law, but it will most likely
include a requirement for a signature from the seller. Some private sellers will
not want to deal with that.
Some countries allow re-sale of USED goods to happen without charging VAT, even
for VAT-registered businesses. No idea if this tax exemption exists in UK - if
it does then not everything that I wrote might apply. There might also be different
ways on how you are allowed to account for expenses - it is possible that UK
TAX Law allows a fixed percentage of the sale to be accounted as an expense,
instead of collecting your purchase receipts.
However if there are any such provisions/exception in the TAX law and you are
thinking of using them - before deciding to do that make sure you consult with
an expert too see IF you can switch to something different few years down the
line, what is the process and what the implications are. Sometimes that kind
of options are 'you can not change this as long as your business exists'
type of a deal, or the process of switching might have serious downsides that
may cancel out the positives.
Personal note - I wish I were able to register as a VAT payer few years earlier
than I did. It was holding me back quite a bit and I felt an immediate freedom
right after registering. No longer had I constantly worry about keeping track
of the 12-month running threshold thing, periodically closing the shop up, evaluating
every larger deal if it will give me a good enough profit margin OR if the profit
is too small in comparison to how much of the sales allowance it will eat up
etc etc. Yes, accounting became much more complex BUT at the same time I also
became legally required to have an actual professional to do my accounting. Which
meant that I no longer had/could do it on my own. It was a huge weight of my
shoulders, I can tell you that much
Last but not least - even though this does not apply to you as currently you
are only selling domestically, but if you are thinking of selling internationally
at some point then being a VAT payer is a big advantage. For one - all international
sales are VAT-free, meaning that if your VAT-inclusive price for your domestic
buyers is 1 pound, the same listing for your international buyers is 0.80 pound.
While if you are non-VAT payer then it is the same for everyone. Additionally
- you will no longer have to pay VAT when importing (or you might still have
to pay but it will be credited towards your VAT payment to the TAX agency at
the end of the month so it cancels out). Compared to not being a registered VAT
business - it opens up additional opportunities to import things for re-sale.
Hope most of what I wrote makes sense
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| | | | | Author: | XKLSVBRKS | | Posted: | Feb 25, 2024 18:25 | | Subject: | Re: UK VAT threshold | | Viewed: | 28 times | | Topic: | Taxes | |
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| Thank you all for your input, it's been really helpful and insightful! I
have definitely learned a thing or two from all this and will do my best to put
it all to good use in the near future.
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United Kingdom, England
France, Provence-Alpes-Côte d'Azur
Lithuania, Panevėžys