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shamrocker's Avatar shamrocker shamrocker is offline
Join Date: Jun 2002
Location: UK
Posts: 858
Lippy, you don't seem to know what you are talking about on the this issue. If you're VAT registered you will have to charge and collect VAT from your customers. As Adam pointed out, when you buy something for £10 you'll automatically pay £1.75 VAT. When you add your £10 mark up (not being VAT registered) =£21.75, the customer will than have paid the VAT back to you plus the £10 trade cost and you will be left with £10 profit. If you are VAT registered you will also have to charge VAT on the £10 profit which is an extra £1.75 (making a total of £3.50 VAT collected). You will then owe IR £3.50. In your VAT returns you will basically take the £1.75 VAT that you paid initially from the £3.50 which means you then owe IR £1.75. Either way you will not lose out on the 17.5% VAT you pay on raw materials, etc. However, as Adam pointed out your products will cost more in theory if you are VAT registered, and you'll have more paperwork to do.

In regard to benefits, as Netcomm said you can now claim Tax Credits when you work over 16 hours a week. I'm not sure of all the exact details off hand but there is a certain amount available, say for example £100 per week. When your paid income goes over the set threshold, which I think is about £92, you will lose something like £0.32 of the £100 available for every £1 you earn over the threshold. Therefore if you earn exactly £92 per week you will get the full £100 top up.

There are some other requirements to be met before you can claim Tax Credits and these figures aren't entirely accurate but you should get the gist of it. One thing I am certain of is that you'll end up with a hell of a lot more money in your pocket this way than by declaring a loss in your business (if a loss is being made that is) and claiming forty odd quid a week in Job Seekers.


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Netcomm UK Netcomm UK is offline
Join Date: Nov 2003
Posts: 549

do me a favour and call your local IR office on Tuesday and ask for the number for the tax Credit helpline. They will back me up as I have only just spoken to them a few weeks ago. Unless they were telling me lies??

Also, I'd believe what james says as he is actually an accountant, so should know his stuff.
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englefield englefield is offline
Join Date: May 2012
Posts: 1
I have been reading all of these last two pages and think Net Comm UK are giving good advise. I have been on ESA for two years due to long term illness where I had to leave my career as sick pay run out etc yaaaaawn.
I am also on DLA with my disabilities. For some time I have been thinking of starting up a small business/self employemt, but did not know where to start.I went to Job Centre and was advised at reception to come off ESA and claim Job seekers where I will receive £40 per week for 26 weeks, and if working ove 16 hrs may be entitled to Tax credits too?. Although is is very frightening I want to move on from this benefit rut, but cannot make head or tail of it all! I am sure my income is going to be very low to start and without some support from benefits, may not survive for long as using all small savings as funding.
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