Should I be VAT Registered

[bc1]

Hi,

My property portfolio is really starting to increase and my rental income is nearing £60k, they are all residentail properties. when this increases to 67K will i need to register for VAT of are residential rental income exempt????

I also have a salary from my day job on paye of 20k and some small income from a my ltd company and some from a small partnership.

any help appreciated

Thanks

[spidersong]

You should be safe:

Firstly residential property rental is exempt (Sch 9 Gp 1 VAT Act 94), and since registration is based on taxable turnover (SCh 1 VAT Act 94), then you won't need to register or even consider the residential income in relation to this.

Secondly VAT registration is based on legal entities these being mainly Sole Proprietors, Partnerships and Ltd Companies, and each entity is looked at separately (unless artificially split) so the fact you have income from a partnership is relevant only to that partnership and not you individually, the same with the ltd company.

Thirdly it looks at turnover by way of business and where you are someone elses employee then you are not acting by way of business. This isn't necessarily always easy to tell of course with contractors etc., but if you're employed PAYE and the employer is fairly experienced then it's unlikely this would be a problem for you.

[bc1]

phew, that is a relief.

Thanks v much

[wamstax]

Hi Spidersong,
This is going to get more tricky for individuals who have not only got residential letting but are also for example self employed. While they may not be up to the VAT limit on sole trader sales/turnover as I understand it HMRC would take into account sole business letting into the equation to see if the person should be registered on TOTAL Sole turnover of letting and self employment. Of course the residential letting would be an exempt supply - therefore barring any claim for input tax -but could affect the level at which self employed trading VAT registerable. True? or am I mistaken?
regards
bill@wamstaxltd.com
http://www.wamstaxltd.com

[Paul Taylor]

Wamstax:

Residential lets and commercial lets without an option to tax are exempt from VAT. The income does not, therefore, count toward the taxable turnover used to determine the requirement to register for VAT.

Regards

Paul Taylor
Senior VAT Consultant
http://www.dains.com/