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I'm not a builder but I'm a sole trader and work mainly with businesses. The threshold that you HAVE to register is £85K but you can do it before. I registered when my turnover was way lower as I could charge the same to companies, but claim back loads more of my expenses. It's really simple now with online accounting software etc, albeit with a basic understanding of the tax system and IT.
Problem comes when you work for consumers who can't claim back the VAT and assume it's all Vat inclusive, I'm always very clear but often people quote ex vat and the client doesn't realise and is hit with a bill that is 20% more.
It has already been mentioned, but the only way that I'm aware of that you can 'make' money is to be VAT registered, claim all the expenses back, but do cash in hand jobs that you neither declare income tax or VAT. It doesn't help that people don't realise the difference between the two, especially as basic rate tax and VAT are both '20%' - I have tried to explain the difference to many intelligent friends, but I'm not sure it's fully got through.
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cjr
hugo7
Isn't the VAT threshold something like £85k a year turnover? I'd have thought that a large proportion of self-employed / small business traders don't need to charge VAT.
The most scam is those that charge it, but don't pay it.