How does VAT work?

Question

If you're self-employed and VAT registered for example.

Answer 1

Every invoice that you charge out you have to add on 17.5%......and every reciept you have for goods you have purchased you can reclaim back.....Petrol, Uniform, Vehicle, Vehicle repairs etc


Each quarter you fill out a delaration adding up all the figure for all the vat you have charged ie......5,000.00 then you add up all the vat you have paid ie 4,000.00


You take the vat you have paid out off the figure you have charged and that is the amount that you have to pay customs and excise £1000.00

Answer 2

You will have to register yourself self employed and its definately worth getting an accountant.

It'll be up to you to pay 17.5% tax bill on everything you earn per year.

BUT, heres the good bit, ifyou keep all the reciepts of things you have bought for your business, you can claim the VAT back on the things you have bought throuhg the yearfrom the VATthat you would have to pay on your earnings.

So if you pay £1000 in VAT on your earnings, BUT have spent £1000 on VAT on the things/equipment you have bought so that your business can operate, AND have the reciepts to pay for it, you'll get that £1000 back.

So if you're careful and good at keeping the 'books', being self emplyed is incredibly worthwhile....and 100% legal, and legally encouraged.

Good luck!