Do I have to register for VAT?

[mejorantes]

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I'm self employed and my main business is affiliate marketing in the UK, I also do my own tax return.

If when the networks pay me at the end of next month my income for this tax year of April to April exceeds £68k do i have to register for VAT?

If I do, what implications does this have for me...will I be worse off?

I am totally confused after googling for information.

[Mogga]

Ring the vat office and ask them to explain.
Or ask a nice accountant. Keith at HRBS might have some stuff on his website about vat which explains it all. (he's got some useful info on there)

[SpongeBob]

When you reach the VAT threshold you do have to be VAT registered - but remember that it is based on turnover over the previous 12 months - NOT the previous financial year. So if in the previous 12 months you have exceeded the threshold then you have to become VAT registered within a short period, otherwise you can be fined. It's a good idea to get VAT registered if you're approaching the threshold and not leave it until you've exceeded it.

It shouldn't leave you worse off, other than a bit more paperwork, if you deal with companies that are also VAT registered. They simply add VAT onto the payments they make to you and you then pay that to the VAT man.

If anything you could be better off, as you can reclaim VAT on things you buy for your business.

[ian]

When to register for VAT | Business Link

[MattSweet]

Do you spend any money on Adwords?

I think you need to add any Adwords expenditure onto your turnover too. If your turnover + adwords expenditure is over the threshold you need to register.

Google Adwords | UK VAT | Easy guide | Reverse Charge | How to complete your VAT Return : HRBS.biz | Fixed Fee Accountants | Free Guides | Save Tax | VAT Advice | Self Employment Help

[mejorantes]

Thanks for the replies everyone.

It looks like I should have already registered as I was not looking at the previous 12 months rolling total, just the year to year total.

Never mind, I have started the process of registering online. I don't have a business bank account, I just my personal one. Does anyone know if this is ok for VAT?

[ian]

No sure if they care where the money comes from but I'd set up a new personal account just for business transactions. Just makes things easier when it comes to running through your payments when it comes to VAT time.

[affiliatec]

You should really have a business account.

When I became VAT registered I also changed from a Sole Trader to a Limited Company.

This way, I knew that all monies coming into the Ltd Company account were subject to VAT.

Also - if you're accepting money from affiliate networks - you will usually only have to supply a VAT number to them and they will "self-invoice" themselves on your behalf.

This way you just account for it at your side and there's no real need to issue invoices.

[Mogga]

Def get a sep account - will make everything much easier.

[befuddle]

I'd seriously get an accountant, they'll take away some of the pain.

A separate business bank account is also an essential, so pop into your bank and also get a dedicated business bank manager.

When registering, go for the flat rate scheme as an "advertiser". This means you pay the advertiser rate at say 10% but you still receive VAT at 17.5%, so you've got 7.5%.

You also get a 1% discount for the first year, so you'd pay 9% tax and not 10%.

[moredial]

I'd be a bit wary of calling a commission based salesman someone who is in the advertising industry. Being a salesman for an ad network may just about get you in but putting someone who publishes websites (effectively a programmer because all sites are written in computer based code) is pushing things a bit. Finding that you have got it wrong and having to pay back the 7.5% could be expensive.

Over the years correctly accounting expenses is more beneficial than a fixed rate. And it means the business accounts are updated at least every 3 months.

[befuddle]

So if it's not "Advertising" at worst it is "Any other activity not listed elsewhere" which is 10.5%.

The flat rate scheme figures are submitted and paid quarterly too.