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Where Taxpayers and Advisers Meet

Do I pay tax after VAT

the5ame
Posts: 5
Joined: Mon Jul 04, 2016 4:48 pm

Do I pay tax after VAT

Postby the5ame » Mon Jul 04, 2016 5:02 pm

Hello,
I am totally new in this world of tax. Been filling tax assesment for the last 5 years but it looks like my part time business is growing up and very soon I will have to become VAT REGISTERED due to treshhold. Lets assume I am vat registered. My gross net profit (after vat) 50k. Question is: are these 50k now tax free and can be spend on anything or I have to "pay" wage to myself and pay tax (50k - 11k(personal allowance) = 39k - 20% on first 32k, and 40% on the rest?)). Sorry if my questions sounds stupid but I searched the web everywhere and could not find an answer. Thank you!

robbob
Posts: 2836
Joined: Wed Aug 06, 2008 4:01 pm

Re: Do I pay tax after VAT

Postby robbob » Mon Jul 04, 2016 5:59 pm

You have to pay tax and vat unfortunately.

control account should be kept for vat so all accounts figures used for determining profits are net of vat as appropriate. Eg if you are on flat rate vat your profit will be gross sales less flat rate vat paid (presuming no inputs to claim) - if you have output and input vat figures will be calculated taking these amounts from gross sales and gross expenses - adjusted for other items like private use as appropriate.

Can you advise if you are limited or sole trader

if you are limited there will likely also be payroll taxes and additional personal tax on dividends (new tax from 6/4/16) the corp tax based on profits after deducting salary.

if sole trader don't forget about the 9% class 4 NI charged on profits

the5ame
Posts: 5
Joined: Mon Jul 04, 2016 4:48 pm

Re: Do I pay tax after VAT

Postby the5ame » Mon Jul 04, 2016 9:54 pm

Sole trader. Just thinking that probably best way is just stay within treshhold and take extra holidays as otherwise will be working for free as my income only gonna go up by little bit :)

bd6759
Posts: 3107
Joined: Sat Feb 01, 2014 3:26 pm

Re: Do I pay tax after VAT

Postby bd6759 » Tue Jul 05, 2016 9:37 am

If your profits are £50K, you pay tax on £50K. It is just the same as you have been doing for the last 5 years. Your "pay" has got nothing to do with the calculation.


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