Another VAT Q

[affit1]

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Hi guys,

Sorry - i'm sure this will have been asked before but here goes...

Very simple - I'm a small comapny earning not very much and thus not VAT registered.

Does this mean that when a network e.g. Affiliate Future pay me £100 commission, I don't have to pay VAT on this.

If I was VAT registered would they send me £117.50 and I'd be liable to sort out VAT on my return each year?

Hope this makes sense

Thanks.

[Travel Pixel]

You dont have to register for VAT until your turnover reaches a certain threshold (around £65000 i think).

However you can voluntarily register for VAT if you wish to reclaim any VAT due on purchases.

The networks should not pay you VAT if you are not registered.

[fizzbird]

Does this mean that when a network e.g. Affiliate Future pay me £100 commission, I don't have to pay VAT on this.

If I was VAT registered would they send me £117.50 and I'd be liable to sort out VAT on my return each year?

Hope this makes sense

It makes perfect sense - you are correct.
If you registered for vat they would have to pay you vat on top of your commission.
You would then include that figure in your monthly vat calculation.

Sometimes, there are advantages to registering, even when you don't have to. If you have a lot of expenses that you pay vat on, you can actually make some money out of it?

[dh5894]

what if you dont pay vat? Is there any other sort of tax you have to pay?
--<br>Posted via my Mobile Device

[cat]

what if you dont pay vat? Is there any other sort of tax you have to pay?
--<br>

Any Affiliate earnings are subject to Income tax (as a Sole Trader).
If a LTD company - Corporation Tax must be paid.

[darrenb]

f you are a company then you will need to prepare accounts and pay corporation tax in the UK on any profits made (income less allowable expenses).

If you are trading as self employed in the UK then you will need to complete a tax return and again declare any profit and pay tax on that amount. They may also be additional payments needed in respect of national insurance.

This is in addition to any VAT that you may have to account for, depending if you are VAT registered or not.

[rachae1]

If you are in the UK and you are earning any kind of income from your website make sure you register your business.

The site below should explain TAX, VAT and NIC

Tax for the self-employed : Directgov - Money, tax and benefits

[Barry]

If you don't spend much on outgoings (with VAT), its worth having a look at the flat rate VAT scheme thats on offer. As an 'advertiser' you only have to pay 10.5% VAT back but you can still claim 17.5% when you invoice anyone. You can do this until your annual taxable turnover is £150,000.

The first year also gives you a 1% reduction in VAT payable which means your making 8% off the taxman. - Nice.

Ta

Baz

[hrbs]

Hi

I have written various guides on tax, VAT etc for affiliate marketing and how to set up and run a business at tips.hrbs.biz which you may find useful.

Regards

Keith
Fixed Fee Accountants and Tax, VAT, Payroll Specialists providing proactive, professional service to small businesses - HRBSaccountants.com

[voucherz]

What happens if you have a full time day job (PAYE), and do a bit of affiliate marketing as a sole trader in the evenings/weekends?

Do you need to fill in a tax return as sole trader?

[rachae1]

You can register as self employed even if you have a full time job. You have to pay tax on your extra income.

This link will tell you more Tax for the self-employed : Directgov - Money, tax and benefits

[voucherz]

Cheers - I managed to get it all sorted yesterday - I rang them up.

It seems a pretty painless process to get registered. I guess the pain comes when you have to give up 1/3 of your earnings! :cry

[rachae1]

What I do every month is put away a percentage in a separate bank account away from my full time wages.

You would probably put away 30% each month if you are not earning very much that will cover your tax and NI. Id also get people to pay you in that account as well so your bank statements show payments and outgoings as you would need to keep these if you got investigated.

If you can try and get someone to manage your tax accounts.

[voucherz]

I am fortunate to have set all my buiness incoming/outgoings in a proper business account. So its pretty easy to tally up where I'm at.

I'm small fry at the moment, but hopefully I'll work myself up the affiliate ladder over the coming months/years.

[hrbs]

Hi
If you are likely to have profits for the current tax year of less than £5,435 , you can apply for the small earnings exception - the form is at http://www.hmrc.gov.uk/forms/cf10.pdf . This means that you do not have to pay class 2 NIC.

If you have a "dayjob" which pays approx £40k you can apply for deferment of NIC - HMRC guidance is at HM Revenue & Customs: Deferment of National Insurance contributions .

Tip: If you can open a deposit/savings account that accepts incoming payments (other than your internal transfers), use that for your AM income and earn interest. Just keep enough in your AM current account to meet any outgoings.

If you have recently started in AM it may be that you have start up and pre-trading costs that can be offset against your income to generate a tax loss which you can offset against your other income and potentially receive a tax refund.

Adwords: Make sure you register as a business otherwise you will be paying 21% Irish VAT, see the howto at http://tips.hrbs.biz/vat/claim-a-goo...ds-vat-refund/ for help.

General invite:
If you would like free access to an online accounting system to keep your accounts under control without installing any software, taking backups etc, feel free to PM or email a4u AT hrbs DOT biz . This software is usually only available to my clients but I am offering it FOC to A4U members without any commitment to using my services.


Good luck!

Keith
Fixed Fee Accountants and Tax, VAT, Payroll Specialists providing proactive, professional service to small businesses - HRBSaccountants.com