I'm an online retailer and VAT has crippled my business. I'm unable to add the cost onto my products as what I sell is so competitive. In light of this, I'm handing over around about £1500 every 3 months of my profits to the tax man. When you sell online, hitting the VAT threshold is really easy. In my eyes, when you're selling to consumers then VAT is a tax that inadvertently sabotages your business. The threshold should be based on profits and not turnover. Turnover doesn't come close in reflecting your profits. Basically it's legalized theft...forced taxation.

I wish they’d told me all this at school. Thank you!

Thanks for being so clear! It’s damn refreshing 😂

Great vid, clearly explained, thank you!!!

Thank you for this video. Much easier to take in than reading and re-reading.

Thanks for this. Sharp, Concise, Clarified !

Great video. Really appreciate the knowledge!

Watched a few videos on this and it didnt click, your explanation especially the bit where you give examples on selling price, cost, profit and tax really did it for me. Thanks!

what a perfect way to explain VAT in general and simple terms, thank you very much

PERFECT VIDEO! Highly appreciated! x

Brilliantly broken down. Thank you.

That was a very useful and informational video. Thank you!!

great clear video, thank you!

I wish the benefits were explained with some numbers like the example. Because it all sounds unbeneficial after hitting £85k i.e. the work around of increasing the pricing to counteract it, whilst making it more expensive for the consumer. Really great explanation! Thanks

Very helpful, thanks.

Very nice video. Thank you

Thank you, this was such a helpful video 😊

Great video, thank you.

Thank you useful information, left me personally a bit low given the extra work it appears i have to but very useful

really helpful thank you

Very helpful thankyou

Amazing

Great video thank you. I am a pretty small online retailer, I'm not a limited company and not VAT registered. It's part time and I am self employed in other work and so it all comes under one umbrella when doing my self assessment. Every supplier I purchase stock from, charges me VAT. With what starts off as a general 45-50% margin on a product, ends up not very good once I pay the VAT added onto their invoice. My business is pretty slow in progress because of this. Something needs to shift to make this work better. I am now starting to import products from China and so moving forward to try and grow, should I set up a limited company and would registering for VAT work for me now bearing in mind the extra accounting I would need to do with this? Thank you

Love the channel. Am I missing something with the application of VAT, as in your example you appear to be applying VAT on top of VAT? In an imaginary world with no VAT, as per your chair scenario the cost of the wood is £50 and as the manufacturer of the chair the cost of your labour appears to be £40 - resulting in a zero-tax cost for the chair of £90. Hence, the ‘profit’ element of any sale of the chair is essentially cost of your labour - i.e. £40. If the supplier of the wood is registered for VAT and you as the manufacturer are not registered for VAT, the effect would be a cost for the wood increasing to £60 (£50 material cost plus £10 assuming 20% VAT), an unchanged cost of labour seemingly at £40 resulting in a cost for the chair of £100 and an unchanged ‘profit’ element of any sale remaining at £40. However, while the final net cost of this chair remains at £90 in respect of the materials and labour, if the sale cost is £100 it appears that that buyer is in fact paying a ‘hidden’ VAT cost of £10. If the supplier of the wood and you as the manufacturer are both registered for VAT, the cost for the wood and your labour should remain unchanged - i.e. £50 plus £40. However, since the supplier of the wood and you as the manufacturer are both charging VAT, wouldn’t the total cost of the materials and labour remain as £90 with a total gross amount of £108 charged - i.e. 20% of £90? In this scenario, the £108 charged for the chair would maintain the £40 ‘profit’ for the manufacturer, it would cover the £50 cost for the wood, cover the £10 VAT to the supplier of the wood and would leave £8 to pay the tax man. On this basis, I am unclear why your second example contemplates a total cost for the chair of £100 plus 20% VAT - here you are seemingly increasing the cost of the manufacturers labour / ‘profit’ by £10 and change 20% VAT on this additional amount of labour / ‘profit’. Your rationale does not appear consistent with your final example, where to compete on price the manufacturer sells the chair for £100; effectively reducing their labour / ‘profit’ by 16.675% (from £40 to £33.33). Considering the apparent overarching principal of VAT, is there anything that would prevent the manufacturer from having multiple companies (some registered for VAT and some not) selling the same product? As it would appear to me that the most efficient strategy would be to have multiple companies below the VAT threshold selling the same chairs at £100 to domestic / residential customers, multiple companies below the VAT threshold selling the same chairs at £120 to domestic / residential customers and a VAT registered company selling the same to chairs to other VAT registered companies at £120. Finally, if it is possible to obtain a VAT refund on unsold purchases, how is this viewed over time? For example, if a company purchases all if their materials / stock in their first year of trading without making a single sale; how would this be carried forward into the next financial year assuming the company sells all of the originally purchased materials / stock and replenishes it all in their second year of trading?

Hi there, do you have a video on the change in VAT rules from 2021? In particular, regarding overseas sellers that sell within the UK

Hi, really great video! How does it work with regards to VAT if you're VAT registered and invoicing a customer in another country (Germany for example)

Thank you so much

To clarify, if you purchase goods from another business, you will also receive from them a vat receipt, so that when you charge your 20% to your customer, you can retain the vat amount that your supplier paid the tax man, and then pay the tax man the difference. The reason why this system is used as opposed to a standard sales tax rate as is implemented in the US, for example, is that customers will pay more for products with longer manufacturing processes. For whatever reason that is important, I dont know, but it probably has something to do with more governmental services being used the more times a product changes hands in its manufacturing process. In the USA, you pay for these govt processes whether you use them or not.

Thank you for making this a bit more clear. So I'm thinking of opening a website to sell prints from my photography. I don't work with clients...I just want to sell physical prints of my work. So from what I understand I don't need to register for VAT as of yet? However, does this also apply to non physical items such as licensing my photos (until I reach the threshold)? Regardless of registered tax or not I assume I'll need to register as self-employed even though I'm just starting up? Thank you :)

Hey, thanks for the simple explanation - great video! If I run my KZfaq channel through a limited company ie I don't actually sell any products or services - could I voluntarily register for VAT and claim VAT back on expenses incurred for running the channel such as a camera? Secondly, similar question but for a limited company and renting a house. No actual products sold again but i would buy things such as furniture that I could claim VAT back on so would it be worth registering there as well? Really appreciate your help!

Nice

Your videos are really helpful! just small question, Can a UK limited company have a "Principal Place of Business" Outside the UK?

I went over 85k sale do needs to regoster for vat now. Good video good explanation

Hi Great video. I have receipts for materials from a supplier who is not registered for VAT. Do I put them in box 7 on the vat return eg are they zero rated or exempt. To me doing so would unbalance the list of figures on the return. Many Thanks

Hi, when you're VAT registered, should you include input VAT when pricing your goods? For example, if I buy an item from a wholesaler for £30 including VAT (£25 + 20% VAT)) should I add my mark-up on top of the £25 because the VAT I pay I will get back? Currently I am not VAT registered so when I price my goods I add my mark-up on top of the price I paid for the product including the input VAT as I cannot claim this back. Also, when paying my vat bill, would I pay 20% on the profit on each transaction or would the VAT be on the total revenue? For example if I sold a product for £50 and earnt £20, would I pay VAT as 20% of £50 (the total cost) or on the £20 (the profit) Thank you

Great video! Question: do I NOT need to pay any VAT in the European Union as long as I don't meet each country's individual threshold? I would only have to pay based on all purchases AFTER I surpass the threshold, correct? Thank you!

Hey, great video! I'm a little stuck on one topic though and I haven't been able to find a clear explaination elsewhere. I am a very very small business (£1000 in expenses so far), should I register for VAT so I can begin claiming back these expenses or does that not work since the VAT I will be claiming will heavily outweigh any VAT I'm paying from adding on the 20% to my good.

I have a question I live in Australia and I've been selling stuff through shopify and a dropshipping app which charge me vat on particular products. My question is if I apply for a vat ID do I have to pay vat if I'm making less than 85 a year?

Clear breakdown - thanks! I have a question though. Currently, we only sell products rated at 0% VAT. Does that mean it is definitely worth being VAT registered because we could then effectively reclaim all VAT we have paid (for our ingredients, fuel etc) and we would then not have to pay any to the Government?

Hi, Can you please show us a filled digital spreadsheet as an example. Kind Regards

Hi,we are involved in equestrian(riding school lessons and livery), it’s seems a complicated scenario, any idea where I can source some clear information/advice on this issue

We are based in the UK, we consult and project manage the installation of electrical hardware. We are about to take on a client outside in the Middle East. They will buy our services and we will supply and install electrical hardware purchased in the UK (so we will be charged VAT), exported for the install. How does VAT apply in this scenario? Many thanks.

Hi Dan So as a limited online company I don’t have to register as VAT since it’s a start up and we will not be hitting the threshold. However we buy our products from china (beauty products eye lashes to be exact at the moment) and I pay VAT on the products we buy so would it be best for us to be VAT registered so we can claim this vat back? Thank you btw

Hello, was wondering if you could help me please. I am near the threshold to become VAT registered. My business is B2C and it would be very difficult to increase cost of goods. So I would have to lower the cost and pay the 20% VAT for the sale. If I am paying more VAT for my sales to HMRC than I can claim back for my purchases will my business be worse off? I’m confused as to if you pay more VAT than you can claim back on your purchases do they owe you it back or do you lose out.

Hii.. please upload a video on withholding taxes

Hi, if you voluntary register for VAT, and you are bellow 85k. From what date should you say you want to be registered? Assuming you want to register back 6 months ago. Can you reclaim VAT back from 6 months ago if you had some clients that charged you VAT on their services? Also when you Invoiced your clients 6 months ago you where not VAT registered, so can you take all that VAT money back, what do you need to do with your old Invoices that didn't had VAT on them cuz you where not registered 6 months ago? Another question: Assuming you register 1 week ahead, your new invoices are containing VAT, your clients are also VAT registered, you do VAT in and VAT out and lets say you need to take some money back from VAT, this extra VAT money are accounted as profit when you do your self assessment at the end of year? Thanks

If I as an importer, bring in a product which I have paid VAT on after going through customs. For example a product that cost £10 and I have paid a vat of £2 on this products. When I re sell the product for let says £15 plus VAT which works out as £3 VAT being charged to my customers. My question is if I had 100 units it means I have given out £300 worth of vat which my customers will claim back from and I will only get £200 back from the government ?

Do you choose whether or not to be vat registered in the UK. is there a threshold where you must be vat registered?

Hi. I am currently nearing the VAT threshold, I know for sure that if I'll stay operational, I would reach it before the 12 month period ends. But I'm quite new to all this and I think I am not yet ready to deal with VAT as I'm busy enough already as it is. Can I close my business while still below the threshold until the first 12 month period ends and resume it after to avoid registering?

Need your opinion, am self employed kitchen fitter and a contractor for kitchen retail company where cis is deducted at payment, though not VAT registered but the company deducts cis and vat before payment, what are your thoughts

Can you assist me with the factors affecting the administration and compliance of VAT by supermarkets please🙏

As an individual with a registered entity in the UK and VAT registration at 20%, if we buy goods from a UK retailer, will we are required to pay VAT? If so, how much can we claim back?

we import goods from china to sell in UK/EU/ROW.. we just started and not VAT registered .. will I be charging vat when selling to any country ? thanks

if an AMZ FBA seller is selling exclusively in the US - thru a UK LTD - do they need to VAT register? all goods are stocked in the US warehouses. TIA!

Very informative video and clear example. Thank you. There is still something I don't quite understand: So there is a presupposition that my client is ok paying £120. Does it make a difference for him if I am registered for VAT at that point? If I wouldn't. Would this £120 be more expensive for him?

Hi, As a landscaping company we charge VAT on our bill. If we buy a brick for £1 +vat, should we charge the customer £1.2 + vat or charge him £1 + vat as we are claiming vat back. Thank you

Hi, thanks for the video, nicely described and very apt for me as I'm a joinery manufacturer. I'm looking at becoming vat registered, but under threshold as work alone. Most joinery companies are vat registered therefore I shouldn't lose out on trade. I can back claim 4 years of vat on goods still used in business which should equate to £20k-£30k in VAT paid on machinery van tools etc. This is a huge benefit for me. I can then charge vat on my end price and claim back vat on materials from which I will keep the remainder. As I see it i will therefore benefit hugely from this, am I correct? When I speak to people who are vat registered they say they do not benefit financially? Thank you in advance as this has been puzzling me for a while.

If you pay VAT using the margin scheme as its 2nd hand goods. Do you charge VAT on the goods you sell (as you are VAT registered) or just pay the VAT as its a margin scheme?

Should I charge VAT on my Labour? Should I charge VAT on materials that I already pay VAT? I'm a tad confused. I'm a sole trader selling Leather Goods so I'm still new to this.

hi Dan, would I pay VAT on KZfaq content? I have a product business that is just under the threshold so if I start making money digitally will I start paying VAT?

I am in Canada and my clients in EU especially France . I am starting an online business ( services) and now I've learned that I have to register for VAT. Where I live, we don't have to register for VAT if we generate less than 30.000$ per year ( which is my case). Don't know what to do and who to ask ? Should I register in Canada or France ?

Hi. I want to register as a sole trader (as a business that provides marketing support on an ad hoc basis in addition to full time work). I know that my take home figures will not exceed the £85k as set by HMRC, but am unsure whether I should be VAT registered. Is the main advantage to claim VAT back on items relating to the business? Or am I getting confused? Please help!

Hi I’m a limited company , selling used and new goods at auction houses, may I know how should I submit my vat returns ? Thanks

Can I claim vat back on a cash purchase,? I paid cash and got an invoice to my business , it was for materials for my business

Thomas Tuchel a business expert

Hi there, I'm from India and want to start selling online stuff in usa and other countries like dropshipping but i have limited budget so usa company formation is bit costly so I'm planing to register company in uk but Do i need to pay vat from day 1 or it is not necessary until i reach 85k pounds revenue. your answer will highly appreciated. thank you so much for this video.

Could you please tell me if i sell kids educational toys in uk do I have to pay VAT on them?

Oh man.. that was a load of help thanks.. I'm starting to sell on Amazon as a sole trader and was wondering if I should be VAT registered from the outset.. it's a minefield! (I'm only selling animal nutritional supplements but then apparently those are zero rated VAT.. so I'm really confused by it all.. you've helped.. a little bit!)

Hi, I have a queation in regards to Vat on delivered goods. If I sold an item for 100 free delivery but the postage cost were £10 am I paying paying to the goverment £16.67 on the £100 sale or do I pay £15 based on the gross net of £90? Hope this makes sense Thanks

If someone is charging me VAT, is there a way I can be sure they are VAT registered and not just having me over?

You have more pens than me in my own office

If I'm below the threshold can I still claim back vat after registering?

Hi. Do I need to handover vat if I am paying foreign supplier

So let me get this straight. You make £100 selling the product that had a total of £60 material cost. Ie. £40 profit. But when youre VAT registered, and you choose to do the second method, why does it not count as the profit being £93.33 (Instead of the £83.33) if you are only paying £6.67 to the tax man. Meaning the actual profit is going to be £93.33 - £50.00 = £43.33. Is there something that I am missing out? What happens to that £10 VAT that gets returned?

But how much the taxes in UK ? For small business!! I live in Italy and i have a small business i make 5k in year ! But here in Italy they kill you with taxes every tree months you should pay 1 k euro for vat taxes and the end of the year you should pay 15% of your yearly profit ..i pay 6 k every year and i make just 5k 😭 , i don't want close my handmade shop but i pay more than i have !! I want change the country and move to UK !! any advice please ...🥺🥺😱

We applied for VAT, after 30days we got a questionnaire, 3 days ago we filled the questionnaire, now the question is when will we get the VAT Number, Kindly help

Hi i own a hot food takeaway with a turn over of £250000 a year and im on a 20% vat scheme and when i work this out after all the hard work that i put in the business i only earn a minimum wage for my self as i have to pay £50000 to vat. Please do you have any advice for me or could you consult me. Thank you

Is the VAT return deadline by the 7th or on the 7th?

What is vat return?

Only register if you pass the threshold if you deal with the public

Hello is that 85k + turnover or 85k gross profit

Manic!

im just here for my math assignment

my taxed income pays for taxed good and services?

Why not just AT?

The only one thing you forgot to say is that by becoming VAT registered, you gain trust and some sort of credibility!

Hi everyone. Great video. Could somone help me out here? Im trying to workout this if somone could help. I charge my customer £31000 including the VAT (I am VAT registered) The goods I purchase from suppliers cost me £24863.25 including VAT (all my suppliers charge VAT) How much is the exact VAT figure that I pay the VAT man after all the offsets etc. Very confusing!! It’s not £6200 I pay the VAT man. It’s that offsetting stuff???

Vat tax = 20% of your sale price - 20% of your supply cost.

Vat is this?

Hi Dan, Do overseas sales (mostly to USA) count towards VAT registration threshold (£85,000)?