Sole trader VAT threshold

C

Chandra

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4
I am near to the threshold for paying VAT as a sole trader. I provide professional services. I would like to expand and earn more money but, the VAT issue is discouraging me. Would it be better to set up a LTD Company? Or would the annual costs be too much for this purpose. Please advise.
 
Who do you provide professional services to? If they're VAT registered, charging them VAT won't be a cost to them.
 
I provide counselling services to individuals who are not VAT registered.
I believe providing services to educational institutions for example, is VAT exempt. Are there other ways to avoid getting into the VAT bracket?
 
Chandra said:
I provide counselling services to individuals who are not VAT registered.
I believe providing services to educational institutions for example, is VAT exempt. Are there other ways to avoid getting into the VAT bracket?
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Health and social care professionals are exempt from charging vat.
 
AJ1 said:
Health and social care professionals are exempt from charging vat.
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'Professional' is the key word here. Anyone registered with the Counsellors and Psychotherapists Registration Board is VAT exempt. If not registered, not exempt.
 
RedOnion said:
'Professional' is the key word here. Anyone registered with the Counsellors and Psychotherapists Registration Board is VAT exempt. If not registered, not exempt.
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Yes I'm not sure what the OPs qualification is or who their professional body is. I'm a chartered educational psychologist with PSI and we are exempt.
 
Hi,
Thanks for your helpful responses and information. I am a psychotherapist accredited with UKCP and a member of ICP. CORU as far as I am aware have not opened the register for the Counsellors and Psychotherapist’ Registration board. Is there anyone who knows of a psychotherapist in private practice who is exempt from VAT due to being a health or social care professional? I will also check it out with Revenue now that I have this information.
 
Consider keeping your threshold below the VAT threshold, which by the way is ridiculously low in comparison to other economies and hasn't been adjusted for inflation in decades.
 
Yes very wise. It’s true…colleagues doing the same job as me in London can earn up to €85000.
 
T McGibney said:
Very.

Costly too.
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My experience is different - now you have me worried!!!
I find it only takes me 5 mins every 2 months to enter the totals into ROS VAT3 form and pay online and then 15mins to do the RTD at end of year? The admin is only slightly more than having to keep the accounts and submit tax return etc which is the bulk of the work. It certainly would never encourage me to earn below the threshold - even if its a few thousand over?
Good to understand what the onerous part / cost is as I find it cost neutral apart form my 1hr per year admin? Is it highly dependent on whether its VAT registered customers you are invoicing (as it is for me)?
As I said for me the hassle was moving to doing a full tax return more than VAT itself.
 
Farma1 said:
My experience is different - now you have me worried!!!
I find it only takes me 5 mins every 2 months to enter the totals into ROS VAT3 form and pay online and then 15mins to do the RTD at end of year? The admin is only slightly more than having to keep the accounts and submit tax return etc which is the bulk of the work. It certainly would never encourage me to earn below the threshold - even if its a few thousand over?
Good to understand what the onerous part / cost is as I find it cost neutral apart form my 1hr per year admin? Is it highly dependent on whether its VAT registered customers you are invoicing (as it is for me)?
As I said for me the hassle was moving to doing a full tax return more than VAT itself.
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The bookkeeping is onerous for many people. You're lucky that you're good at it.
How costly is is will depend on whether your customers can validly reclaim the VAT you charge, and who your competitors are.
 
In my business I didn't have a choice (had to register) because of my earnings, but I never in 17 years had a refund! Always paying out every two months. So costly yes. Was it easy to manage...yes! I set up an easy to use Excel spreadsheet to input figures & voila every 2 months took 5 minutes. RTD took longer because you only do it once a year so always forget how to! I figured out a way to do that quickly eventually too.
As I wind down my business I have de-registered and tbh it's nice but gotta watch the income & what you take in, so I do turn away some business to stay under the requirement.
 
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